Oil rises to $57 as Iran talks drag on

Thursday, 9 July 2015 00:00 - - {{hitsCtrl.values.hits}}

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London (Reuters): Oil bounced back from a three-month low to around $ 57 a barrel on Wednesday after an industry report showed a larger-than-forecast drop in US crude stocks and Iran nuclear talks failed to produce a deal.

Negotiations in Vienna between Iran and six world powers dragged on beyond a self-imposed deadline as officials on both sides talked of important differences preventing a deal to lift sanctions and so allow more Iranian oil onto world markets.

“Those market participants who have been betting on a rapid Iranian return to the oil market are now likely to square their positions, which should lend short-term support to prices,” said Carsten Fritsch, senior oil analyst at Commerzbank.

Brent crude was up 34 cents at $ 57.19 a barrel by 1248 GMT. On Tuesday, Brent fell to $ 55.10, its weakest since 6 April. US crude was down 12 cents at $ 52.21.

Negotiators in Vienna have given themselves at least until Friday to come up with a final deal on the Iranian nuclear program.

A senior Iranian diplomat said Tehran would not show flexibility regarding its “red lines”, suggesting financial markets may have been over-optimistic on the prospects of a deal.

Prices also gained support from expectations that the latest weekly US inventory data would show a drop in domestic crude inventories. The American Petroleum Institute’s supply report on Tuesday showed a 958,000-barrel decline, more than analysts expected, ahead of Wednesday’s official data.

Crude had come under downward pressure earlier on Wednesday as a plunge in China’s stock market accelerated and the Greek debt crisis raised concern about fuel demand.