Updates prices, market activity, adds commentary; changes byline, changes dateline from London

By Nicole Jao

NEW YORK, Feb 4 (Reuters) - Oil prices rose on Wednesday, continuing gains in the previous session, as the market kept focus on planned talks between Iran and the United States to de-escalate tensions.

Brent crude oil futures LCOc1 were up around 0.8%, or 54 cents at $67.87 a barrel by 12:06 p.m. ET (1706 GMT). U.S. West Texas Intermediate crude CLc1 was up 0.66% or 42 cents, at $63.63.

Both benchmarks have seesawed this week between news of talks to de-escalate tensions between the United States and Iran and heightened fears of potential disruption to oil flows through the Strait of Hormuz.

"Oil would be lower without Middle Eastern sabre-rattling," PVM analysts said in a note.

The U.S. military on Tuesday shot down an Iranian drone that "aggressively" approached a U.S. aircraft carrier in the Arabian Sea, the U.S. military said.

US AND IRAN DUE TO HOLD TALKS

Separately, a group of Iranian gunboats approached a U.S.-flagged tanker north of Oman, maritime sources and a security consultancy said. The U.S. and Iran are due to hold talks in Oman on Friday, according to a regional official.

OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the Strait of Hormuz, mainly to Asia.

Meanwhile, India's Russian oil imports slipped in January, continuing a downturn that began in December, as refiners sought alternative sources due to Western sanctions pressure and ongoing U.S.–India trade talks, Reuters sources said and data showed.

CRUDE OIL INVENTORIES FALL

The Energy Information Administration said on Wednesday U.S. crude stocks fell last week as a winter storm gripped large swathes of the country.

U.S. crude oil inventories fell by 3.5 million barrels to 420.3 million barrels last week, as oil output slid to the lowest since November 2024, the EIA said, compared with analysts' expectations in a Reuters poll for a 489,000-barrel rise.

The gains from the oil inventories draw were likely limited as the decline was not as large as the more than 11 million barrel decline estimated by the American Petroleum Institute on Tuesday, said Phil Flynn, senior analyst with Price Futures Group. API/S