Oil falls after parties to nuclear agreement vow to intensify efforts to normalize trade with Iran

Sergei Karpukhin | Reuters

Oil prices fell just before the settlement on Friday after the remaining parties to the Iran nuclear deal vowed to help normalize trade with the Middle Eastern nation.

U.S. West Texas Intermediate (WTI) crude futures settled down 96 cents, or 1.6%, at $58.47 a barrel after trading in a narrow range for most of the session.

European parties to the Iran nuclear deal have been trying to rescue the accord and are trying to keep Iran from violating the deal.

Crude futures were little changed for most of Friday ahead of talks over the trade dispute between the U.S. and Chinese presidents this weekend and on production cuts from OPEC on Monday.

Tensions between the United Sates and Iran have also been keeping markets on edge.

A week after President Donald Trump called off air strikes on Iran at the last minute, the prospect that Tehran could soon violate its nuclear commitments has created additional diplomatic urgency to find a way out of the crisis.

The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between Trump and Chinese President Xi Jinping on Saturday.

A trade war between the world's two biggest economies has weighed on prices, fanning fears that slowing economic growth could dent demand for oil.

Trump said he hoped for productive talks with the Chinese president, but said he had not made any promises about a reprieve from escalating tariffs.

"Since we don't anticipate significant progress out of tomorrow's Trump-Xi discussions, we are not ruling out some reduction in risk appetite next week with U.S. equities relinquishing a sizable portion of this week's gains," Jim Ritterbusch of Ritterbusch and Associates said in a note.

"Furthermore, we are not looking for any surprises out of the Monday-Tuesday OPEC+ meeting as a simple rollover of the existing agreement through the rest of this year would appear to be the most probable outcome."

The Organization of the Petroleum Exporting Countries and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts.

Russia is cutting its oil output in June by slightly more than envisaged in the OPEC+ deal, RIA news agency cited Russian Energy Minister Alexander Novak as saying.

"The market sentiment is that OPEC+ will agree to extend cuts, but after all what matters is how deep the cuts will be and how much Saudi Arabia and Russia will curb," said Kim Kwang-rae, a commodity analyst at Samsung Futures in Seoul.

OPEC+ members agreed to curb oil output by 1.2 million barrels per day from Jan. 1.

Oil prices could stall as a slowing global economy squeezes demand and U.S. crude floods the market, a Reuters poll of analysts found, despite an expected extension by OPEC and its allies of their output-cutting pact.

The survey of 42 economists and analysts forecast Brent crude would average $67.59 a barrel in 2019, down from the $68.84 estimate in May.

Record U.S. crude production has also capped oil prices. U.S. crude output in April rose to a fresh monthly record, surpassing 12 million barrels per day, according to a government report on Friday.

U.S. energy firms this week increased the number of oil rigs operating for a second week in a row, bringing the total count to 793, General Electric Co's Baker Hughes energy services firm said in its closely followed report.