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Oil futures edge lower after Wednesday's rally, Iran talks eyed

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Shutterstock photo - - Crude oil futures edged lower on Thursday, as negotiations between western diplomats and Iran over Tehran's nuclear program dragged on beyond a deadline.

On the ICE Futures Exchange in London, Brent oil for May delivery slumped 21 cents, or 0.37%, to trade at $56.83 a barrel during European morning hours. A day earlier, Brent futures rallied $1.99, or 3.61%, to close at $57.10.

Talks between Iran and six world powers continued in Switzerland on Thursday, after missing a deadline to reach an agreement on March 31.

The west wants Iran to accept restrictions on its nuclear program in exchange for the removal of international sanctions.

Any sign of a deal between Iran and world powers could result in a flood of Iranian crude returning to an already oversupplied market.

Elsewhere, on the New York Mercantile Exchange, crude oil for May delivery slumped 34 cents, or 0.67%, to trade at $49.76 a barrel. On Wednesday, Nymex oil futures surged $2.49, or 5.23%, to settle at $50.09.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 4.8 million barrels in the week ended March 27, below the 5.2 million barrel build reported by the American Petroleum Institute.

Total U.S. crude oil inventories stood at 471.4 million barrels as of last week, the most in at least 80 years.

However, the data showed a drop in U.S. crude output for the first time since late-December, fuelling speculation that an ongoing collapse in rigs drilling for oil will finally result in lower production.

According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. stood at 813 last week, the lowest since March 2011.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Oil prices have fallen sharply in recent months as the Organization of Petroleum Exporting Countries resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $7.07 a barrel, compared to $7.01 by close of trade on Wednesday.

Elsewhere, the U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.45% to 98.08 early on Thursday.

Later in the day, the U.S. was to release data on initial jobless claims and factory orders as well as a report on the trade balance.

Investors also focused on Friday's U.S. employment report, which was forecast to show a gain of 245,000 jobs in March, following an increase of 295,000 in February.

On Wednesday, payroll processing firm ADP said non-farm private employment rose by 189,000 last month, below expectations for an increase of 225,000 and the lowest since January 2014.

A separate report showed that manufacturing activity in March slowed to the lowest level in 14 months.

The disappointing data fuelled concerns over the health of the U.S. economy and dampened expectations for higher interest rates. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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