Oil down as Iran races for Tuesday deadline on nuclear deal

Mon Mar 30, 2015 4:19pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil settled down for a second straight session on Monday as Iran and six world powers tried to negotiate a deal on Tehran's nuclear program that could end Western sanctions and allow the OPEC member to ship more crude into an already flooded market.

Crude prices finished sharply off the day's lows, however, as prospects that the talks would produce a deal looked even at best, with just 24 hours before the March 31 deadline.

Iran and negotiators for the world powers have made progress in their discussions, according to officials following the talks in Lausanne, Switzerland, and many investors believe there will be some sort of an agreement to free Tehran from at least part of the U.S.-led sanctions that have restricted its oil exports.

But with only a day to the deadline, U.S. State Department spokeswoman Marie Harf offered just a 50-50 chance of achieving a framework agreement with Iran.

That led to a late burst of support for oil, and prices settled only slightly lower, after falling more than 2 percent earlier in the session, extending Friday's 5 percent drop.

"When you've barely 24 hours to announce a deal, it's not very convincing to hear that you've just a 50-50 chance," said John Kilduff, partner at New York energy hedge fund Again Capital.

"I myself am convinced that this market should be trading a lot lower. But we're reacting to headlines, and after Friday's selloff, anything even remotely positive to the bulls could lead to a surfeit of short-covering."

Benchmark Brent oil settled down 12 cents at $56.29 a barrel, after falling $1.21 earlier.   Continued...

An oil derrick is seen at a fracking site for extracting oil outside of Williston, North Dakota, in this file photo taken March 11, 2013. REUTERS/Shannon Stapleton/Files