MELBOURNE Oil prices dropped slightly on Tuesday on the latest progress in the talks to revive the 2015 Iran nuclear accord, which would clear the way to boost its crude exports in a tight market.
The price of crude oil fell 14 cents, or 0.1 per cent, to $96.51 a barrel at 0404 GMT, down a 1.8 per cent gain from the previous session.
U.S. West Texas Intermediate WTI crude futures declined by 16 cents, or 0.2 per cent, to $90.60 a barrel, after climbing 2 per cent in the previous session.
The possibility of a U.S. nuclear deal with Iran continues to hover over the market, ANZ Research analysts said in a note.
The final text to revive the 2015 Iran nuclear deal has to be put forward by the European Union on Monday, awaiting approval from Washington and Tehran. A senior EU official said that there was a possibility that Iran will increase oil exports within a few weeks, despite the uncertainty surrounding the resumption of Iran's oil exports.
He said Iran could boost its oil exports by 1 million -- 1.5 million barrels per day, or up to 1.5 per cent of global supply, in six months.
A revival of the 2015 nuclear agreement will likely see oil prices fall sharply, given markets don't believe a deal will be reached, Dhar said.
After stronger than expected trade data from China on the weekend and the surprising acceleration in U.S. jobs growth in July, signs that demand may not be dented as much as feared are keeping a floor under the market for now.
Recently the oil market has been under pressure due to global recession fears, with Brent prices suffering their biggest weekly drop last week.
China, the world's largest crude oil importer, brought in 8.79 million barrels of crude per day in July, a decline of 9.5 per cent from a year ago, but up from June's import volumes, according to China's customs data.
On Tuesday, traders will be watching for weekly U.S. oil inventory data, first from the American Petroleum Institute and then the Energy Information Administration on Wednesday.
Five analysts said crude stockpiles fell by around 400,000 barrels and gasoline stockpiles declined by about 400,000 barrels in the week to Aug. 5, while distillate inventories, which include diesel and jet fuel, were unchanged.