5 Min Read
* France joins Britain and the U.S. in oil reserves release talks
* Iran to reopen talks with world powers on April 13
* Small rise seen in U.S. jobless claims, last week at 4-year low
* U.S. crude stocks surge 7.1 million barrels last week -EIA (Updated throughout, previous SINGAPORE)
By Jessica Donati
LONDON, March 29 (Reuters) - Oil prices held near $124 a barrel on Thursday on concerns about the loss of Iranian oil despite the prospect of a release of strategic oil reserves in the West and renewed promises of additional supply from Saudi Arabia.
France's Prime Minister Francois Fillon said on Thursday there was a good chance of an accord between the U.S. and Europe on a release of strategic oil reserves.
Ahead of elections in both France and the U.S., pressure is mounting to tackle high fuel prices.
"The talk of a possible strategic oil reserve release by the U.S. and EU is another big effort to talk prices down, but that's not really happening," said David Morrison, a market analyst at financial services company GFT, adding the downward effect of last year's emergency release had only been temporary.
Brent crude was down 19 cents at $123.97 a barrel at 0953 GMT, after falling 1.09 percent the previous session. U.S. crude was down 42 cents at $104.99 a barrel, after a drop of 1.79 percent on Wednesday.
Saudi Arabia's oil minister Ali al-Naimi attacked high oil prices in a rare opinion piece published in the Financial Times on Wednesday.
Oil prices also held up against signs of a slowdown in China, with the Shanghai exchange closing at a two and a half month low as corporate results disappointed.
"There seems to be more pressure on the upside despite concerns about global growth... The big thing underpinning oil is central banks' willingness to continue printing money," Morrison continued.
Fed Chairman Ben Bernanke spurred expectations in comments at the start of the week the bank could yet launch a third round of quantitative easing if the U.S. economy needed a boost.
A below-forecast increase in new orders for U.S. durable goods dented optimism about growth in the world's largest oil consumer.
U.S. jobless claims data due at 1230 GMT on Thursday was expected to show a small increase in claims after the number dropped to a four-year low last week.
Front-month Brent crude is on track to post a second straight quarterly rise of more than 15 percent by the end of this week.
Rising tension between Iran and the West over Tehran's nuclear program, accidents in the North Sea and reported attacks on oil-producing areas in South Sudan have all contributed to the upward trend.
A recovery in the U.S. economy has also helped lift front-month West Texas Intermediate (WTI) crude by more than 6 percent in the first quarter.
"The U.S. economy is still improving and there's a potential saviour in a QE3 package if it weakens," said Ben Le Brun, a Sydney-based market analyst at brokerage OptionsXpress.
"This, coupled with any significant downside news coming out of Iran, will underpin the strength in oil prices."
Iran expects to reopen talks with world powers on April 13 in a bid to defuse increasing tension, Iranian Foreign Minister Ali Akbar Salehi said.
Deutsche Bank estimated that supply of about 2 million barrels per day (bpd) has been disrupted, with up to half of the missing supply attributable to lost Iranian exports.
A surprise build in U.S. crude oil inventories on Wednesday did little to ease supply concerns, as the increase was partly attributed to weather conditions.
Instead, analysts took an unexpected drop in gasoline inventories to be a sign the export market was strong and could ultimately support demand for oil.
"The largest weekly build in crude stocks since July 2010 was unexpected, but the price response has been somewhat limited as closer examination of the data reveals that much of the increase is attributable to arrival of imports that had been delayed by weather conditions," said Harry Tchilinguirian and Gareth Lewis-Davies of BNP Paribas in a note. (Editing by James Jukwey)