Oil futures down 2% as markets eye Iran deal

Crude oil futures extended sharp losses from the previous session on Monday, amid signs of progress in discussions between western diplomats and Iran over its disputed nuclear industry. On the New York Mercantile Exchange, crude oil for May delivery hit an intraday low of $47.85 a barrel, before trading at $48.07 during European morning hours, down 80 cents, or 1.6%. On Friday, Nymex oil futures plunged $2.56, or 4.98%, to settle at $48.87. Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery slumped 58 cents, or 1.03%, to trade at $55.83 a barrel after touching a session low of $55.76. London-traded Brent lost $2.78, or 4.7%, on Friday to close at $56.41. Meanwhile, the spread between the Brent and the WTI crude contracts stood at $7.76 a barrel, compared to $7.54 by close of trade on Friday. Talks between western diplomats and Iran are set to resume on Monday amid hopes of reaching an agreement over Tehran’s nuclear program before Tuesday’s deadline. Any sign of a deal between Iran and world powers could result in a flood of Iranian crude returning to the market. Meanwhile, market players continued to monitor development in Yemen after Saudi Arabia and a coalition of Gulf region allies launched air strikes last week to counter Iran-backed Houthi rebels besieging the southern city of Aden. However, fears over a disruption to supplies from the region faded as Yemen is only a small crude exporter and oil tankers could avoid passing the Bab el-Mandeb Strait, which connects the Gulf of Aden with the Red Sea, to reach their ports of destination. Approximately 3.8 million barrels per day of crude and oil products flow through the strait. Elsewhere, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.5% to 98.12 early on Monday. The index slid 0.66% last week, the second consecutive weekly decline. The dollar pushed higher against the euro and the yen on Monday after Federal Reserve Chair Janet Yellen reiterated Friday that the bank is likely to start raising interest rates later this year. Investors were turning their attention to Friday’s U.S. employment report for February, and Monday’s data on personal spending for further indications on the path of monetary policy.

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