Oil prices fell on Friday on concerns about oversupply as investors kept an eye on Greek bailout talks and the looming deadline for Iran's nuclear deal.
After staging a 40% rally in the spring on expectations of strong demand and production cuts, oil prices have been confined to a narrow range in the past two months because the global glut of oil shows few signs of abating.
"The market appears to have been set on cruise control, but the road remains rife with hazards," said analysts at Barclays. "Prices face downward pressure for the remainder of the year on resilient oil supplies."
The benchmark U.S. oil contract declined 60 cents, or 1%, at $59.10 a barrel on the New York Mercantile Exchange. The global Brent contract fell 35 cents, or 0.6%, at $62.85 a barrel on the ICE Futures Europe exchange.
Losses accelerated in the midmorning as U.S. floor trading opened. Given the possibility of Iranian oil production opening up and a flood of supply sitting in tankers around the world, many fear oil prices are poised to tumble again.
Demand has been strong, but the summer peak is near, said John Kilduff, founding partner of Again Capital in New York, which invests in energy commodities. "The supplies aren't going away for sure, but the demand might ebb a bit, that should be enough to tip us over," Mr. Kilduff said. "We could be back on the same path to exactly what happened last year."
The Greek debt issue and Iranian nuclear deal are taking center stage in Friday's trading because both have June 30 deadlines, said Michael Poulsen, oil analyst at Global Risk Management. The uncertain outcome of either situation was weighing on oil prices as traders looked for direction, he added.
European finance ministers have pushed talks over a Greek bailout deal to this weekend. Failure to clinch a deal could put Greece on the road to bankruptcy and exit from the common currency area, which could roil financial markets. A Greek default could also hurt European oil demand, analysts said.
In Iran, Supreme Leader Ayatollah Ali Khamenei has taken a harder line over his country's nuclear program this week, putting at risk negotiations for a final agreement ahead of the June 30 deadline. A final agreement to curb Iran's nuclear program next week is expected to pave the way for the lifting of Western sanctions and allowing of additional Iranian crude to be exported to global markets, which would pressure oil prices further.
The latest U.S. oil drilling rig count, a proxy for activity in the industry, will be released on Friday by Baker Hughes Inc. The number of rigs has fallen sharply since oil prices headed south last year. There are now about 61% fewer rigs working since a peak of 1,609 in October. The rate of decline, however, has slowed in recent weeks and some shale oil companies say they could add rigs in the coming months if prices stabilize near the current levels.
In refined fuel markets, gasoline futures rose 0.1% to $2.0385 a gallon, while diesel futures fell 0.3% to $1.8575 a gallon.
Eric Yep contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com and Timothy Puko at tim.puko@wsj.com
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(END) Dow Jones Newswires
06-26-151110ET
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