[SINGAPORE] Oil prices opened lower on Monday as Iran and six world powers were close to nailing down a nuclear deal, while Greece and its creditors failed to find a bailout agreement over the weekend.
The potential of Iran soon adding to global oil oversupply and the demand side weakening over China and Europe led several analysts to say that crude would fall further.
Iran and six world powers were on the brink of finding a nuclear deal that would bring sanctions relief in exchange for curbs on Tehran's nuclear programme.
In Europe, the Greek debt crisis continued as political leaders argued late into the night at an emergency summit, so far without result.
And in Asia, investors will watch whether China's stock markets can stabilise after a barrage of government support sparked a bounce in its key CSI300 stock index.
Front-month US crude futures were down 85 cents at US$81.89 per barrel at 0113 GMT. Brent crude was down 90 cents at US$57.83 a barrel.
With oversupply ongoing and abundant economic risk, the International Energy Agency (IEA) and several banks said they had lowered their oil price forecasts. "The bottom of the market may still be ahead," the IEA said in its monthly report. "The oil market has faced persistently weak supply/demand balances for months. Now macro risks from Greece, Iran, and China are adding to the poor micro," Bank of America Merrill Lynch said, adding that US crude prices "could soon drop well below our US$50 per barrel target in 3Q15".
Commerzbank said that a return of Iranian supplies could add to current oversupply of 1.5 to 2 million barrels per day, adding pressure on prices while there were also downside risks on the demand side after China's 2015 car sales growth had been cut from 7 to 3 per cent. "A fall below US$55 per barrel in Brent and below US$50 per barrel in WTI (US crude) is therefore conceivable".
China's sentiment this week will be tested by trade flows data to be published later on Monday, as well as its gross domestic product report on Wednesday.
During the 2,650 trading sessions since 2005, US crude prices have spent a mere 178 days (7 per cent) of the time below US$50 a barrel, Reuters data shows.
The sub-50 periods have been clustered into three periods: the time of early 2005, when prices began to rise away from historically lower levels, the post-2008 global financial crisis time, and the current period of oversupply.