Oil futures succumbed to pressure on Monday from expectations of higher global supplies tied to Iran, rising production from the Organization of the Petroleum Exporting Countries and a strong U.S. dollar — all of which fueled a 1% decline in U.S. crude prices.
Greece’s deal with creditors eased worries over energy demand in Europe, offering some support for oil prices, while OPEC’s monthly report also showed an increase in the cartel’s forecast for global oil demand growth this year. Read: Latest news on the Greek debt crisis
On the New York Mercantile Exchange, August West Texas Intermediate crude settled at $52.20 a barrel, down 54 cents, or 1%, after trading between a high of $53.17 and low of $51.26.
Brent crude for delivery in August fell 88 cents, or 1.5%, to $57.85 a barrel on London’s ICE Futures exchange.
Oil was “getting whipsawed on the potential fallout from an Iranian deal,” said Phil Flynn, senior analyst at Price Futures Group.
Officials from several European nations have said they want to reach an agreement with Iran by Monday evening, or else the talks run the risk of failing after deadlines have been repeatedly extended. U.S. officials have indicated they may be prepared to give the talks some more time.
Iran is bearish for oil, “but will the devil be in the details?” said Flynn. “Will Iran be able to sell oil right away…You can’t get too bearish until we see the deal.”
Meanwhile, a monthly report from OPEC harbored both bullish and bearish news for the oil market.
OPEC cut demand expectations for its crude oil this year by 100,000 barrels and reported a monthly increase of 283,000 barrels a day in its member production. OPEC also raised its forecast for oil demand growth in 2015 to 1.28 million barrels a day and forecast that global consumption would grow even faster in 2016.
“It seems like that Saudi Arabia is completely out of sync with the reality and wants to pump as much oil as they can to help their budget deficit situation,” said Naeem Aslam, chief market analyst at AvaTrade.
In the U.S., however, a monthly Energy Information Administration report showed that oil output from seven major shale plays is forecast to fall in August.
In China, the country’s imports fell 6.7% in June from a year earlier in yuan terms. A spokesman for China’s Customs department said Monday, however, that the nation’s exports and imports will likely turn around in the second half of the year.
Back on Nymex, prices for August gasoline dropped 7.7 cents, or 3.8%, to $1.94 a gallon and August heating oil lost 2.1 cents, or 1.2%, to $1.719 a gallon.
August natural gas settled up 9.4 cents, or 3.4%, to $2.864 per million British thermal units, finding support as forecasts for “above-normal temperatures” raised the potential for an increase in cooling demand, according to analysts at Schneider Electric.