LONDON, June 1: World oil prices rose slightly on Thursday, reversing earlier losses, after data revealed a smaller-than-expected increase in US motor fuel stocks and as tensions resurfaced over major crude producer Iran, dealers said.

The market was also gearing up for the latest output decision from OPEC. Analysts expect the Organization of the Petroleum Exporting Countries to decide to keep pumping crude at 25-year-high levels.

Traders also responded to news of a major oil spill in Nigeria, Africa’s biggest producer of crude, which forced Anglo-Dutch oil giant Shell to cut production by 50,000 barrels per day according to a company spokesman.

New York’s main contract, light sweet crude for delivery in July, gained 16 cents to $71.45 per barrel in pit trading.

In London, Brent North Sea crude for July delivery added four cents to $70.45 per barrel in electronic trading.

Crude futures had fallen heavily on Wednesday and extended losses early Thursday, after the United States offered to hold direct talks with Iran — for the first time since 1979 — over the Islamic republic’s disputed nuclear programme,.

Prices were dampened by expectations that OPEC ministers, meeting in the Venezuelan capital Caracas on Thursday, would hold the oil cartel’s official production quota at 28 million barrels per day.

But crude futures later rebounded, mainly owing to the US stocks data, dealers noted.

The Department of Energy said reserves of gasoline (petrol), which are in focus at the start of the US summer driving season, rose by 800,000 barrels to 209.3 million in the week ending May 26.

The figure was below the predicted increase of 1.4 million barrels.

The driving season, which began last weekend, sees US holidaymakers taking to the roads, greatly increasing demand for motor fuel during the northern hemisphere summer.

The US Energy Information Administration said on Thursday that gasoline demand jumped to 9.43 million barrels last week from 9.19 million the week before.

“The market expects a high increase in (gasoline) stocks, while we saw a strong rise in demand for products,” Societe Generale analyst Alexandre Kervinio said.

The combination of data was supportive for prices, he added.

Crude futures were meanwhile winning support from concerns over Iran, which has rejected US conditions for talks over its controversial atomic programme, saying it was ready for negotiations but unwilling to freeze sensitive nuclear work.—AFP