U.S. oil rallied 6 percent on Monday as traders reassessed how quickly Iran could increase exports after a preliminary nuclear deal and anticipated that a months-long rise in U.S. inventories may be slowing.
U.S. crude for May delivery closed up $3.00, or 6.11 percent, at $52.14 a barrel, its largest one-day gain since February 3. Brent crude for May delivery was up $2.90 from Thursday at $57.80 a barrel.
Brent crude tumbled nearly 4 percent on Thursday after Iran and six world powers announced a framework agreement on the OPEC member's nuclear program. But initial expectations of a quick recovery in oil exports were tempered by views that it could take up to a year to roll back sanctions.
"While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles," Morgan Stanley analysts said in a note.
"Even if a final deal is reached, we do not expect any physical market impact before 2016," the analysts said.
Oil extended gains after industry intelligence group Genscape reported that stockpiles at Cushing, Oklahoma, barely rose last week, according to traders. It would be the smallest increase in stocks since November at the delivery point for the U.S. crude contract traded on the New York Mercantile Exchange.
A Genscape official was not immediately available to comment.