Oil prices dipped in Asian morning trading on Monday, adding to steep losses in the previous session, as Iran and six world powers tried to reach a deal that could add oil to the market if sanctions against Tehran are lifted.
Iran and six world powers tried to break an impasse in nuclear negotiations on Sunday ahead of a deadline to find a prelminary deal by Tuesday, although diplomats warned the attempt could still fall apart.
International benchmark Brent crude oil futures were at $56.41 a barrel at 0131 GMT, flat with its last settlement after falling 5% on Friday as the market began to price in the possibility of a deal with Iran. Front-month U.S. West Texas Intermediate (WTI) crude futures lost 25 cents at $48.62 a barrel.
"Any relaxation of Iran oil sanctions could see increased exports adding to swelling global supplies and further pressuring prices," ANZ bank said on Monday.
In the United states, the oil rig count continued to fall as producers adjust to lower prices, although analysts said that lower drilling activity would only affect actual oil production later this year.
"The current rig count is pointing to U.S. production declining slightly sequentially in 2Q15 and 3Q15," Goldman Sachs said in a note.
Despite the expected dip, Goldman said that drilling could bounce back in 2016.
"U.S. producers are preparing to ramp up activity later this year by successfully raising equity and building an uncompleted well war chest. Coupled with the large availability of external capital, this leaves risk to our $65 per barrel 2016 forecast skewed to the downside as these assets will quickly be deployed in a lower cost environment," the bank said.
Energy consultancy Wood Mackenzie said last week that oil and gas exploration costs were set to fall by a third and that 2016 could see drilling activity bounce back to 2014 levels.