Oil falls in volatile trade on supply worries, dollar and Iran

Thu Mar 5, 2015 4:21pm EST
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By Barani Krishnan

NEW YORK (Reuters) - Oil closed lower on Thursday in volatile trade, as a soaring dollar and the U.S. pursuit of an Iranian nuclear deal offset earlier gains from supply concerns in Libya and Iraq.

Libya's declaration of force majeure on nearly a dozen of its oilfields due to security concerns and arson attacks by Islamic State militants on Iraqi oil wells helped prices climb during the European session.

In New York trade, the market came off its highs after the dollar hit 11-1/2 year highs against the euro, weighing on oil prices denominated in the greenback.

Washington's pursuit of a nuclear agreement with Tehran, which could end sanctions against Iran and bring more oil from the OPEC member into an already flooded market further dragged on prices.

Even so, market bulls convinced oil had hit a bottom after the June-January selloff that had knocked 60 percent off prices stepped in to prevent a sharp slide in Thursday's session.

Those betting on a "blowout" in the spread between benchmark Brent oil and U.S. crude added to the market's volatility, traders said.

Brent LCOc1 settled down 7 cents at $60.48 a barrel, after rallying more than $1 earlier.

U.S. crude CLc1 finished down 77 cents at $50.76, after rising to $52.40 earlier.   Continued...

An oil well pump jack is seen at an oil field supply yard near Denver, Colorado February 2, 2015. REUTERS/Rick Wilking