Brent crude slipped to $106 a barrel on Wednesday as the prospect of a rise in Iranian oil exports weighed while investors looked to the U.S to assess supply.
Big powers and Iran have continued to move ahead on an interim deal that eases some sanctions on Tehran in exchange for curbs on its nuclear programme.
Any sign that the initial deal might lead to higher Iranian oil exports will add to global supply and depress prices.
“It looks as if we’re moving towards resumption of production (and the) lifting of sanctions,” Michael McCarthy, chief strategist at CMC Markets in Sydney told the media.
“That’s the major reason for the weakness in Brent.”
“February Brent crude slipped 0.09 dollars to 106.30 dollars a barrel by Wednesday morning. Brent has hovered the last two sessions just above a two-month low of 106.03 dollars hit on Friday,’’ said McCarthy.
US crude delivery for February was down off 0.02 dollars to 92.57 dollars, after settling up 0.86 per cent on Tuesday.
The preliminary accord between Iran and the group of world powers goes into effect on Jan. 20.
Under the deal, Iran’s oil exports are to hold at current levels of about one million barrels per day.
Talks on a final settlement to the long dispute over Tehran’s nuclear ambitions will start in February.
The resumption of oil production at Libya’s El Sharara field has also weighed on prices, although the key issue is still when the blockade at its eastern oil ports will end.
Weekly crude stocks in the U.S fell by 4.1 million barrels, data from industry group, American Petroleum Institute, showed on Tuesday.
This outcome was against projected decrease of 600,000 barrels by media analysts’ poll.