Crude futures fell on Friday on worries that Iran may get an agreement to lift sanctions on its oil exports, outweighing optimism that Greece may have a bailout deal by the weekend to bring relief to global markets.
The International Energy Agency’s (IEA) forecast of weaker oil demand also weighed on the market after a surge in Chinese equities supported crude prices earlier.
Weak U.S. gasoline prices were another negative factor, especially for New York traded crude.
Brent crude fell 48 cents at $58.13 a barrel by 11:15 a.m. (1515 GMT), giving up gains of more than $1 from earlier in the session. Brent had settled up more than 3 percent on Thursday, a powerful rebound from Tuesday’s three-month lows.
Front-month U.S. crude futures were trading 70 cents lower at $52.08 per barrel, having risen more than $1 too in earlier trade.
“The prospects on a Greece bailout is encouraging but we’re down on anticipation that an Iran deal may also get done,” said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.
In Tehran, Ali Akbar Velayati, top adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, said his country had no intention to abandon nuclear talks with the United States and other world powers aimed at lifting sanctions on its crude exports. The negotiations expired on Friday without a deal.
UK Foreign Secretary Philip Hammond told NBC News negotiators are making progress: “I’m confident that our officials working with the Iranians over the next 12 hours or so will clear up some more of the text and then ministers will regroup tomorrow to see if we can get over the last hurdles.”
The International Energy Agency (IEA) said on Friday that oil prices are set to come under further pressure from easing global demand and an expanding glut of crude, while a rebalancing of the oil markets may last well into next year.
The IEA, the West’s energy watchdog, said it expected global demand growth to slow next year to 1.2 million barrels per day from 1.4 million this year—far less than needed to balance stubbornly growing non-OPEC and OPEC supply.
“Physical oil market fundamentals remain weak and, in the absence of OPEC production cuts or material supply disruption, this is unlikely to change meaningfully,” Deutsche Bank said in a note.
Related: Kings of Crude: US vs OPEC
In China, the CSI300 stock index closed more than 5 percent higher, extending gains from the previous session after the government launched a barrage of support measures aimed at halting a 30 percent fall in share prices since June.
Chinese auto sales dipped for a third straight month, falling 2.3 percent in June from a year earlier, prompting a halving of its annual sales growth forecast to 3 percent.
Top oil exporter Saudi Arabia continues to keep output and export supply high, maintaining fully contracted volumes to Asia in August.