Investing.com - Oil futures tumbled on Thursday, as investors looked ahead to the outcome of discussions between western diplomats and Iran over Teheran's disputed nuclear program.
Talks between Iran and six world powers continued for an eighth day in the Swiss city of Lausanne, after missing a deadline to reach an agreement on March 31.
Iranian Foreign Minister Mohammad Javad Zarif said earlier that "significant progress" had been made but more discussions were needed to reach a deal.
The west wants Iran to accept restrictions on its nuclear program in exchange for the removal of international sanctions.
Any sign of an agreement between Iran and world powers could result in a flood of Iranian crude returning to an already oversupplied market.
On the ICE Futures Exchange in London, Brent oil for May delivery slumped $1.52, or 2.67%, to trade at $55.58 a barrel during U.S. morning hours. A day earlier, Brent futures rallied $1.99, or 3.61%, to close at $57.10.
Elsewhere, on the New York Mercantile Exchange, crude oil for May delivery slumped $1.12, or 2.24%, to trade at $48.97 a barrel. On Wednesday, Nymex oil futures surged $2.49, or 5.23%, to settle at $50.09.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $6.61 a barrel, compared to $7.01 by close of trade on Wednesday.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 4.8 million barrels in the week ended March 27, below the 5.2 million barrel build reported by the American Petroleum Institute.
The data showed that U.S. crude output declined for the first time since late-December, fuelling speculation that an ongoing collapse in rigs drilling for oil will finally result in lower production.
According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. stood at 813 last week, the lowest since March 2011.
Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.
Oil prices have fallen sharply in recent months as the Organization of Petroleum Exporting Countries resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.
Elsewhere, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.75% to 97.78 early on Thursday.
Investors focused on Friday’s U.S. employment report, which was forecast to show a gain of 245,000 jobs in March, following an increase of 295,000 in February.
The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits declined by 20,000 last week to 268,000 from the previous week’s total of 288,000. Analysts had expected initial jobless claims to fall by 3,000 to 285,000 last week.
A separate report showed that the U.S. trade deficit widened narrowed 16.9% in February to $34.44 billion, the lowest level since 2009.
On Wednesday, payroll processing firm ADP said non-farm private employment rose by 189,000 last month, below expectations for an increase of 225,000 and the lowest since January 2014.
The disappointing data fuelled concerns over the health of the U.S. economy and dampened expectations for higher interest rates.