The Investor SA

Oil futures down 2% as markets eye Iran deal

 

30 March, 2015

by Investing.com

 

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   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.