Oil prices pared some losses after falling by more than $3 a barrel on Thursday after the White House called a news report that the U.S. and Iran may be approaching a deal on oil exports false.
Oil fell sharply on the report, which cited two unnamed sources as saying that Iran and the U.S. are nearing a temporary deal that would trade some sanctions relief in exchange for reducing Iran's uranium enrichment.
But trade reversed on skepticism that oil sanctions would be lifted quickly and after the White House said the report was false.
Brent crude settled down 1.29% at $75.96 a barrel, having earlier dropped as much as $3. U.S. West Texas Intermediate crude was down 1.71%, or $1.24, to $71.29.
"This report is false and misleading," said a spokesperson for the White House National Security Council, referring to an article on the Middle East Eye website.
A 2018 U.S. executive order restored sanctions targeting Iran's oil, banking and transportation sectors after the Trump administration abandoned a 2015 nuclear deal.
A larger-than-expected rise in U.S. gasoline inventories also raised concerns over demand, while U.S. crude stockpiles registered a small decline of 451,000 barrels.
At an OPEC+ meeting on Sunday, Saudi Arabia said it will cut its crude output by 1 million barrels per day in July on top of a broader deal to limit supply into 2024 as the producer group seeks to boost flagging prices.
There is growing consensus the central bank will skip a rate hike, which could lift oil prices even before falling supply starts draining global oil inventories, Varga added.
Economists polled by Reuters expect the U.S. Federal Reserve will not raise interest rates at its June 13-14 meeting. But a significant minority expects at least one more increase this year.
Still, a surprise rate increase in Canada gave investors their second reminder of the week, following the Australian central bank's monetary policy tightening, that the surge in global interest rates is not done yet.
The U.S dollar was slightly weaker on Thursday, making oil cheaper for buyers holding other currencies.
Both oil benchmarks settled up about 1% on Wednesday, supported by the Saudi plan, though gains remained capped by rising U.S. fuel stocks and weak Chinese economic data.