Possible signs showing that the Iranian nuclear talks could lead to the lifting of sanctions brought Brent crude oil below 58 dollars a barrel on Tuesday. Brent LCOc1 was down 50 cents at 57.62 dollars a barrel while U.S. crude CLc1 was down 60 cents at 51.54 dollars a barrel.
The positive outcome of the talks came as Iranian officials visited Beijing to seek more oil sales, leading to speculations that there could be further oil glut.
China is Iran’s largest trade partner and had bought roughly half of its crude exports since 2012, when sanctions against the Islamic Republic were tightened.
Oil markets were also pressured by a Goldman Sachs report saying prices needed to remain low for months to slow U.S. oil output growth.
Global oil markets already face a supply glut with producers pumping over 1.5 million barrels per day (bpd) more than demand in the first half of this year, analysts say.
“There is a massive oversupply, stocks are rising and now we have the prospect of more Iranian oil coming onto the market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
Goldman said in a research note it expected U.S. crude inventories to top out in April and subsequently draw down at 350,000 bpd during May-September, when demand for fuel would be high.