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Evidence this week of ample global supplies,
including the biggest jump in U.S. inventories since 2001, a
glut of unsold Nigerian crude and Saudi Arabian output reaching
a record high, limited the rally.
Brent crude <LCOc1> was up 23 cents at $56.80 a barrel by 0725
ET, remaining on track for its third weekly gain in four weeks.
U.S. crude <CLc1> was down 15 cents at $50.64 a barrel.
"The latest agreement with Iran does not open the floodgates for
a significant return of Iranian oil on the market as many had
feared," said Harry Tchilinguirian, head of commodity markets
strategy and oil strategy at BNP Paribas.
World powers and Iran announced the interim accord last week.
But on Thursday, Iranian supreme leader Ayatollah Ali Khamenei
demanded all sanctions on Iran be lifted on the same day as any
final agreement, while the U.S. maintains that sanctions would
be lifted gradually.
The price of Brent has halved from $115 hit last June, a drop
that deepened after OPEC in November decided not to cut output,
choosing to defend market share instead. Top exporter Saudi
Arabia was the driving force behind the policy shift.
"Most of the fundamental factors are still pointing to lower
prices," said Eugen Weinberg, analyst at Commerzbank. "At the
moment, we have an oversupply of more than 1 million barrels per
day."
While some OPEC members are urging output cuts to boost prices,
Saudi Arabia has shown no sign of a rethink. Oil Minister Ali
al-Naimi told reporters on Tuesday that Riyadh had boosted its
crude production to 10.3 million bpd, the highest rate on
record.
Further pressuring prices, a U.S. government report on Wednesday
said domestic crude stocks surged by nearly 11 million barrels
last week, the biggest gain in 14 years.
A glut of unsold Nigerian crude is building up too, traders say.
This is particularly bearish for Brent, because Nigerian crude
is priced against it.
(Additional reporting by Florence Tan; Editing by Dale Hudson
and Ruth Pitchford)
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