Oil prices partially recover after US, Iran deny reported nuclear deal

© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

By Laura Sanicola

(Reuters) -Oil prices settled lower on Thursday but rebounded from earlier losses after the U.S. and Iran both denied a report that they were close to a nuclear deal.

Oil fell by more than $3 on the report that the U.S. would give Iran sanctions relief to export oil in return for Tehran reducing uranium enrichment.

A spokesperson for the White House National Security Council called the report "false and misleading".

Brent crude settled down 99 cents, or 1.3%, at $75.96 a barrel while U.S. West Texas Intermediate crude settled down $1.24, or 1.7%, to $71.29.

"If there's no Iran deal then we're back where we were before, focused more on fuel demand," said John Kilduff, partner at Again Capital LLC in New York.

Oil prices were lower earlier after the U.S. reported a larger-than-expected rise in gasoline inventories on Wednesday. That raised concern about U.S. fuel demand, with the peak summer driving season well under way.

Demand concerns outweighed the prospect of tighter supply after Saudi Arabia pledged at a weekend OPEC+ meeting to cut crude output by 1 million barrels per day in July. That unilateral cut was in addition to the group's broader deal to extend existing supply curbs into 2024.

Oil prices could get a lift if the U.S. Federal Reserve skips a rate hike at its next meeting on June 13-14, said Tamas Varga from PVM brokerage. Economists polled by Reuters expect no hike at the meeting.

The U.S. dollar was slightly weaker on Thursday, making oil cheaper for buyers holding other currencies.