Investing.com - Oil futures were lower on Monday, as traders awaited developments surrounding nuclear talks between the West and Iran, while concerns over a global supply glut weighed.
On the ICE Futures Exchange in London, Brent oil for September delivery shed 76 cents, or 1.28%, to trade at $58.25 a barrel during U.S. morning hours, trimming losses after hitting a session low of $57.18.
Elsewhere, on the New York Mercantile Exchange, crude oil for August delivery fell to an intraday low of $51.28 a barrel, before recovering to trade at $52.33 a barrel, down 41 cents, or 0.78%.
The spread between the Brent and the WTI crude contracts stood at $5.92 a barrel, compared to $6.26 by close of trade on Friday.
According to media reports, Iran and six world powers neared a long-awaited nuclear deal that would end sanctions on Tehran in exchange for curbs on the country's disputed nuclear program.
A deal is viewed as bearish for oil prices, as Iran reportedly hoards 30 million barrels of crude in its reserves ready for export. An outflow of Iranian oil could depress crude prices in a global market already oversaturated by a glut of oversupply.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
In its monthly report released earlier in the day, OPEC raised its 2015 oil demand growth forecast by 100,000 barrels a day to 1.28 million barrels. For 2016, the oil cartel sees global demand increasing by 1.34 million barrels per day.
OPEC also said the group produced 31.38 million barrels of oil in June, 283,000 barrels a day higher compared with May, driven mainly by higher output from Saudi Arabia and Iraq.
The International Energy Agency on Friday forecast weaker global oil demand next year and warned that prices are set to come under further pressure from an expanding glut of crude.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 96.77, up 0.85% for the day.
The greenback remained supported after Federal Reserve Chair Janet Yellen said in a speech Friday that the central bank is on track to raise interest rates at some point this year. The comments from Yellen are her most definitive to date on the timing of a 2015 rate hike.
Fed Chair Yellen appears before the House Financial Services Committee on Wednesday. Her testimony will be closely watched for further clues on when U.S. interest rates may start to rise.
Market sentiment recovered after a deal over a third bailout deal for Greece was reached after marathon all-night talks between European leaders.
The Greek parliament must pass new legislation on Monday and Tuesday to implement the measures agreed in Brussels, including on pensions reform and a new sales tax regime. Parliaments in several euro zone countries will also have to approve any new bailout.
Eurogroup President Jeroen Dijsselbloem said talks on bridge financing for Greece will begin immediately, to help cover its debt repayments this summer. He also said that €50 billion of state owned Greek assets would be set aside in a fund to contribute to the recapitalization of Greek banks.
Elsewhere, Chinese trade data released earlier showed that the country’s trade surplus narrowed to $46.5 billion last month from $59.5 billion in May, compared to estimates for a surplus of $55.7 billion.
Chinese exports rose 2.8% from a year earlier, beating forecasts for a decline of 0.2%, while imports fell 6.1%, better than expectations for a drop of 15.0%.
A slowdown in domestic demand indicated a recovery in the broader economy remains fragile and may need further government stimulus.
China is scheduled to release data on second-quarter gross domestic product on Wednesday. The report is expected to show the world's second largest economy grew 6.9%, slowing from 7.0% in the preceding quarter.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.