Oil prices fall on demand fears, headed for second weekly loss

TOKYO  – Oil prices fell in early Asia trade on Friday as demand concerns outweighed the prospect of tighter supply from global producers while investors remained skeptical that the United States and Iran could strike a nuclear deal.

Brent crude futures dropped 36 cents, or 0.5 percent, to $75.60 a barrel by 0058 GMT, while the U.S. West Texas Intermediate crude futures eased 33 cents, or 0.5 percent, to $70.96 a barrel.

Both benchmarks slid by around $1 on Thursday, rebounding from their earlier losses of more than $3, after the U.S. and Iran both denied a report by the Middle East Eye that they were close to a nuclear deal.

For the week, they were on track for about 1 percent losses and for a second week of losses. Oil prices rose early this week following Saudi Arabia’s pledge over the weekend for deep output cuts, but they pared gains after rising U.S. fuel stocks and weak Chinese export data.

“Apparently, market is still skeptical about the U.S.-Iran nuclear deal,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

There is both upside and downside pressure on prices, he said, with fears over tighter supply and expectations of higher demand as the United States enters driving season being offset by worries over further U.S. interest rate hikes and slow pickup in China’s fuel demand.

“Oil prices are expected to stay in a range of about 3 dollars above and below $70 for WTI in the near term,” Yoshida said.

The United States and Iran on Thursday both denied a report that they were nearing an interim deal under which Tehran would curb its nuclear program in return for sanctions relief that would include exporting up to 1 million barrels of oil per day.

Some analysts say, however, oil prices could get a lift if the U.S. Federal Reserve skips a rate hike at its next meeting on June 13-14. Economists polled by Reuters expect no hike at the meeting.