Oil prices lose 3% as Iran nuclear deal seems likely; Analysts trim oil forecasts
On Monday oil prices fell by as much as 3 percent as Iran and six world powers were close to concluding a nuclear deal.
Brent crude for August fell $1.89 to a low of $56.84 a barrel before rallying back to around $57.70 by 0725 GMT.
West Texas Intermediate (WTI) was down 90 cents at $51.84 a barrel.
Iran and six world nations are now on the verge of concluding a
nuclear agreement that would lift sanctions in exchange for curbs on
Tehran's nuclear program, says Reuters.
Several analysts pointed to a further drop in oil prices due to the possibility of Iran adding to a global oil glut when the demand outlook could potentially weaken given a fall in China's equity markets.
Morgan Stanley commented that if it is successful, "U.S. production growth may not be needed until 2017, keeping 12-18 months deferred WTI prices under $70 a barrel. Similarly, under such a scenario, Brent could remain range-bound below $70 through 2016."
Several banks trimmed their oil forecasts.
Bank of America Merrill Lynch said U.S. crude prices "could soon drop well below our $50 per barrel target in 3Q15".
Commerzbank said a fall below $55 per barrel in Brent and below $50 per barrel in U.S. crude was "conceivable".
A number of commodity strategists said that, although it would take until 2016 before Iran would be able to return to full-scale exports, a jump of around 200,000 barrels per day in exports could be observed in the short term, adding to a current glut of about 2.6 million barrels a day.
