02 April 2015 – Oil prices fell on Thursday as attention returned to nuclear talks with Iran, with the prospects for a deal and an increase in Iranian crude exports helping to keep pressure on prices.
Major powers and Iran have stretched talks on Tehran’s nuclear programme into a second day past an end-March deadline, with diplomats saying prospects for a preliminary deal were balanced between success and collapse in the coming hours.
Both Brent and US crude prices snapped three-session losing streaks on Wednesday, gaining $2 or more after data from the Energy Information Administration (EIA) showed a fall in rigs drilling for oil resulted in a drop in output last week for the first time since late-December.
Brent crude for May delivery was down 37 cents at $56.73 a barrel in early trade on Thursday. The contract had settled $1.99 higher on Wednesday.
US crude for May delivery was down 50 cents at $49.59 a barrel, after closing up $2.49, or 5.2%.
In the Swiss city of Lausanne, US Secretary of State John Kerry and German Foreign Minister Frank-Walter Steinmeier said they would stay at least until Thursday in an effort to seal a “political” agreement with Iran, a step towards a final pact due by end-June that could release more oil on to global markets.
Optimism for an agreement is thin among many analysts. “(I expect) nothing beyond a general statement of intentions to keep talks going through spring,” professor Scott Lucas of EA WorldView, a specialist website on Iran and Syria, told Reuters Global Oil Forum.
Despite US production falling for the first time since late December, crude inventories still rose last week to a record high for the 12th straight week.
“Slower growth in inventories is signalling that production is finally catching up to the recent decline in the US rig count,” analysts at ANZ said in a note.
The EIA pegged the US crude stock build last week at 4.8 million barrels, while analysts polled by Reuters had expected a 4.2-million-barrel build on average.
Oil prices were also supported on Wednesday as the dollar was pulled lower by fresh signs that US economic growth slowed in the first quarter.
Commodities denominated in dollars, such as oil, become more attractive to holders of other currencies when the greenback weakens.