Oil settled lower after fluctuating between losses and gains for most of the day after the US kept hopes for reaching a nuclear deal with Iran alive.
Light sweet crude for August delivery settled down 54 cents or 1% to end at $52.20 on the New York Mercantile Exchange after wavering between a high of $53.17 and a low of $51.26 a barrel for most of the day.
Brent for August delivery, the global benchmark, slipped 88 cents or 1.5% to end at $57.85 a barrel on the London based ICE Futures Exchange.
“What seems to be weighing on the market more than anything is, obviously, this potential Iranian deal,” Phil Flynn, analyst at Price Futures Group, told the Wall Street Journal.
Oil traders have been closely following the talks between Iran and the world powers over the curtailment of the country’s nuclear program in exchange for having economic sanctions against it lifted.
The talks, which are now expected to extend past the self imposed Monday midnight deadline, are expected to worsen the oil glut by reintroducing millions of barrels of oil from the Islamic country.
“There’s every indication that both sides want a deal, and that’s causing oil to sell off,” David Thompson, executive vice-president at Powerhouse, a commodities broker in Washington that specializes in energy, told Reuters.
“But we must remember too that the U.S. Congress has to review whatever’s agreed, so the deal could still unravel later.”
Crude prices also responded to changes in the strength of the dollar with the greenback ending 0.7% higher on the Wall Street Journal Dollar index which tracks the value of the dollar against a basket of foreign currencies.
A stronger dollar is bearish for the demand of oil as it makes it cheaper to holders of foreign currencies.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org