SINGAPORE: Brent crude slipped $1 on Monday as Iran agreed to resume talks that had collapsed more than a year ago on the country's nuclear programme with the United States and its allies, raising hopes of a peaceful resolution to the standoff.
Prices were also under pressure on demand growth concerns after data showed US employers hired far fewer workers in March than in previous months. Job growth in the world's biggest oil consumer slowed to 120,000, the Labor Department said on Friday, the smallest increase since October.
Front-month Brent crude fell 94 cents a barrel to $122.49 by 0251 GMT, after slipping to as low as $122.17. US oil traded $1.17 a barrel lower at $102.14, after sliding to as low as $101.87. Oil futures markets were closed on Friday.
"The talks are good news. They are going to ease some stress from the oil market, but not enough to bring oil below its current trading range," said Ken Hasegawa, a commodity derivatives manager at Newedge Brokerage in Tokyo. "Oil is falling because the jobs data came out worser than expected."
Brent may trade between $120 and $125 and US oil in a $100-$105 range this week, Hasegawa said. Oil may slip below the range only if investor worries about a supply disruption from Middle East is significantly reduced, he said.
Iranian media and Western officials said talks over Tehran's nuclear programme would begin on Saturday in Istanbul. A return to the table had been in doubt after Iran and the other negotiators - the United States, Britain, France, Russia, China and Germany - released conflicting statements about the venue.
Getting Iran to suspend high-level uranium enrichment and close a nuclear facility built deep under a mountain near the holy city of Qom are "near-term priorities" for the United States and its allies, a senior US official said.
Worries that the standoff between Tehran and the West would escalate and disrupt oil exports from the Middle East have boosted Brent prices nearly $20 so far this year to a high of $128.40 touched last month.
DEMAND GROWTH
Concerns about demand growth from the United States and Europe as investors worry about the health of these economies are also keeping a lid on oil prices.
Last Friday's US employment numbers were the latest to make markets nervous. Job growth was less than half the average monthly increase in the prior three months and way below the lowest estimate in a Reuters survey. Economists had expected an increase of 203,000 and the jobless rate to hold at 8.3 percent.
Asian shares fell and the dollar extended losses against the yen on Monday as investors turned cautious ahead of more US data and earnings due this week.
In Europe, the International Monetary Fund said Portugal's main risk is that the recession turns out deeper than projected, partly due to a mild recession in the euro zone.
Investors are worried that Portugal will have to follow Greece in seeking a further bailout. The IMF has already said it will release 5.17 billion euros ($6.8 billion) to the crisis-stricken Portugal country.
"Oil markets would need to monitor even more carefully what is happening in Europe," Hasegawa said. "If the economic condition worsens there is scope for prices to go down further."
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