Oil holds around US$55 as Iran nuclear talks drag on

[LONDON] Brent crude oil futures held around US$55 a barrel as speculation continued over whether a preliminary deal over Iran's nuclear programme would be reached, opening the way for more Iranian crude to come into world markets.

Talks between Iran and six world powers to settle a dispute around Tehran's nuclear programme extended beyond a Tuesday deadline in the Swiss city of Lausanne.

Brent crude for May delivery was down three cents at US$55.08 a barrel by 1026 GMT, after reaching a session low of US$54.70.

US crude for May delivery was trading 39 cents lower at US$47.21 a barrel.

Iranian senior nuclear negotiator, Abbas Araqchi, said that Iran hoped to wrap up talks by Wednesday night. "We insist on lifting of financial and oil and banking sanctions immediately...for other sanctions we need to find a framework," he told Iranian state television on Wednesday.

French Foreign Minister Laurent Fabius was more cautious, saying on Wednesday that talks between Iran and world powers were not sufficiently advanced to ensure a quick conclusion.

Talks had appeared to get bogged down after the United States warned it was ready to abandon them altogether and Iran affirmed its "nuclear rights", with officials cautioning any agreement would probably be fragile and incomplete. "If you get an agreement, there is the likelihood of Iranian oil being allowed to hit an already oversupplied oil market and drive prices lower," said Michael Hewson, chief markets analyst at CMC Markets.

Iran currently produces around 2.8 million barrels per day (bpd), according to a Reuters survey, although Western sanctions limit exports to 1 million bpd. It keeps around 30 million barrels of crude on its fleet of oil tankers ready to be sold if possible.

Higher OPEC supply also put pressure on oil prices, after a Reuters survey showed the oil cartel increased supply in March by 560,000 bpd, to its highest since October. Iraq's exports rebounded after bad weather and Saudi Arabia pumped at close to record rates.

US crude inventories rose for the 12th straight week by 5.2 million barrels, in the week to March 27, according to data from the American Petroleum Institute. Official stockpile data is due out on Wednesday at 1430 GMT.

Reuters