SINGAPORE: Brent crude fell below $107 a barrel on Thursday, as expectations of more supply from the Middle East and North Africa outweighed a large drop in US crude stockpiles.
Major world powers and Iran continued to move ahead on an interim deal that eases some sanctions on Tehran in exchange for curbs on its nuclear programme.
"The Iran situation is a bearish factor for Brent. But still a lot can go wrong and Iran could continue to support the market in the long term," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. Brent crude for February delivery was down 40 cents at $106.73 per barrel by 0332 GMT, after settling 74 cents lower.
The contract expires Thursday.
US crude rose 5 cents at $94.22, after ending up for a third straight day on Wednesday, $1.58 higher.
The February contract expires next Tuesday following a long US holiday weekend.
Oil was supported by data showing US crude oil inventories shed 7.7 million barrels last week, compared with estimates of 600,000 barrels, the largest seven-week fall since records began.
The drop extended this week's gains in US oil. Both benchmarks had trended downwards since the end of December in part due to expectations the Federal Reserve could curb its commodity-friendly monetary stimulus programme.
"I don't think the rebound (in oil prices) is sustainable," said Nunan.
"Both contracts will flip into March delivery in the coming days, which is when the refinery turnaround season starts.
So refining demand should drop and inventory draws reverse."
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