Brent slips as hopes rise of progress in Iran nuclear dispute

Brent crude prices eased towards $108 a barrel today on hopes of progress in resolving a long-standing dispute over Iran’s nuclear programme after Tehran said it wanted to jump-start talks with world powers.

A large build in US crude oil inventories and a rebound in supplies from Iraq and Libya also weighed on prices.

Brent crude oil futures shed 12 cents to $108.20 a barrel by 0242 GMT.

US crude oil futures fell 30 cents to $102.36, on track for its sixth straight session of losses and its longest daily losing streak since May, 2012.

"No doubt those inventories out of the US had an impact across markets and news flow is continuing to improve in terms of tensions in Syria (and Iran), so a little bit of risk premium has certainly been removed from oil markets at the moment," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

“Overall the picture out of Middle East this week has been improving so that’s why we’ve seen oil markets a little bit lower even though commodities have held up.”

Iran’s new government said yesterday it wants to jump-start talks with world powers to resolve a decade-long dispute over its nuclear program and hoped for a deal in three to six months.

Iranian foreign minister Mohammad Javad Zarif is set to hold talks on the nuclear issue today with US Secretary of State John Kerry as well as diplomats from Britain, France, Russia, China and Germany, in a rare encounter between top American and Iranian officials.

The West's standoff with Iran over the Opec nation's nuclear program has helped support oil prices for nearly a decade. Years of sanctions have cut Iranian oil exports by more than 1 million barrels per day (bpd).

The improving situation in Syria also pressured oil prices.

Envoys from the United States, Russia, France, China and Britain have come to an agreement on the core of a UN Security Council resolution to get rid of Syria’s chemical weapons, three Western diplomats said yesterday, but Russia denied such an accord had been reached and insisted work was “still going on.”

Syria is not a major oil producer but prices had climbed in the past on worries that any escalation of Middle East violence could disrupt oil flows.

Total oil inventories in the United States rose 2.6 million barrels to 358 million barrels last week, which helped turn U.S. crude oil futures lower immediately after the US Energy Information Administration (EIA) data was released.

The data also showed US exports of refined products, such as gasoline and distillates, last week reached the highest level on record at 3.4 million barrels per day, 17.5 per cent higher than a year ago, as refineries process crude oil at high rates.