Oil trims losses as traders weigh progress in US–Iran talks

By Mohi Narayan and Katya Golubkova

NEW DELHI, Feb 18 (Reuters) - Oil prices steadied in Asian trade on Wednesday after falling about 2% in the previous session as investors assessed progress in U.S.–Iran talks but remained cautious about the prospects of a final deal that could ease supply concerns.

Brent futures LCOc1 rose 23 cents or 0.34% to $67.65 a barrel by 0412 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 was up 19 cents or 0.3% at $62.52. Both are around two-week lows.

Iran and the U.S. reached an understanding on Tuesday on main "guiding principles" in talks aimed at resolving their longstanding nuclear dispute, but that does not mean a deal is imminent, Iranian Foreign Minister Abbas Araqchi said.

Analysts remained sceptical about the potential for further progress.

"Crude oil prices look poised for a technical rebound ... However, a finalised agreement remains distant, and markets remain cautious about the durability of diplomatic momentum," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.

Political consultancy Eurasia Group said in a Tuesday note to clients that it thinks there is a 65% probability of U.S. military strikes against Iran by the end of April.

Also weighing on oil prices were reports from Russian media that output at the Tengiz oil field in Kazakhstan, one of the world's largest, was rising after a suspension in January.

Tengiz plans to reach full capacity by February 23, Reuters sources said.

The market will be focused on weekly reports by the American Petroleum Institute, due later in the day, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, on Thursday.

Analysts polled by Reuters estimated that U.S. crude oil stockpiles likely rose last week, while distillate and gasoline inventories probably fell.

They expect crude inventories climbed by about 2.3 million barrels in the week to February 13, while stockpiles of gasoline USOILG=ECI declined by around 200,000 barrels and distillate inventories USOILD=ECI, which include diesel and heating oil, dropped by some 1.6 million barrels.

Meanwhile, negotiators from Ukraine and Russia wrapped up the first day of U.S.-brokered peace talks in Geneva on Tuesday, and President Donald Trump urged Kyiv to move swiftly toward an agreement to end the four-year conflict.

"Any shift in that geopolitical axis could add risk premium (to prices)," Sachdeva added.