U.S. crude ended near flat, as expectations of more supply from the Middle East and North Africa competed with data and a large drop in stockpiles.
Oil was also constrained by bearish signals from a possible rise in Iranian oil exports. A thaw in relations between Tehran and Western powers has led to speculation that markets could see a boost in Iranian supply.
Crude oil stocks dropped by 7.7 million barrels on the week, capping the largest 7-week drop on record, compared to a forecast of a 0.6 million barrel fall, according to the U.S. Energy Information Administration. Gasoline stocks rose by 6.2 million barrels, more than forecast, while distillate stocks came off by 1 million barrels versus an expected build of 1.5 million.
The spread between U.S. crude futures WTI and Brent has narrowed this week on the imminent start of a major new pipeline able to pump up to 700,000 bpd from the mid-continent of the United States to refineries on the Gulf Coast, meaning that this crude will compete more evenly with the international market.
Brent prices have been declining this week as some Libyan exports have restarted. Iranian oil exports could also rise by some 500,000 barrels per day (bpd) through a oil-for-goods deal being negotiated with Russia, according to Russian and Iranian sources.