Crude Oil Ends Lower On Iran Deal; Supply Concerns Ease

(RTTNews) - U.S. crude oil pared losses but still ended lower Monday, after the six western powers and Iran reached an agreement on the Middle East country's nuclear program, which is likely to improve the international crude oil supply situation amid a strengthening dollar.

The six world powers and Iran reached an initial agreement early Sunday that halts the progress of Iran's nuclear program and rolls it back in key respects. The initial, six month step includes significant limits on Iran's nuclear program and will address the most urgent concerns, including the Middle East country's enrichment capabilities, its existing stockpiles of enriched uranium, the number and capabilities of its centrifuges, and its ability to produce weapons-grade plutonium using the Arak reactor.

In return, as part of the initial step, the P5+1 will provide limited, temporary, targeted, and reversible relief to Iran. The relief is structured so that the overwhelming majority of the sanctions regime, including the key oil, banking, and financial sanctions architecture, remains in place.

Light Sweet Crude Oil futures for January delivery, the most actively traded contract, dropped $0.75 or 0.8 percent to close at $94.09 a barrel on the New York Mercantile Exchange Monday.

Crude prices for January delivery scaled a high of $94.30 a barrel intraday and a low of $93.08.

Last week, oil settled higher on perceived improved demand growth prospects after some upbeat initial jobless claims data out of the U.S., even as apprehension over the upcoming talks with Iran later this week persisted.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.93 on Monday, up from 80.65 late Friday in North American trade. The dollar scaled a high of 81.02 intraday and a low of 80.68.

The euro traded lower against the dollar at $1.3513 on Monday, as compared to its previous close of $1.3549 late Friday in North America. The euro scaled a high of $1.3559 intraday and a low of $1.3490.

In economic news from the U.S., the the National Association of Realtors said its pending home sales index dipped 0.6 percent to 102.1 in October from an upwardly revised 102.7 in September. The modest drop came as a surprise to economists, who had been expecting pending sales to rise by 1.1 percent.

From the eurozone, business sentiment among French manufacturers in November remained unchanged at 98, data from the statistical office Insee revealed. The reading was forecast to drop to 97. The balance of opinion on personal production expectation dropped again, to 1 from 8 a month ago.

During the week, focus will be on the U.S. Commerce Department's housing starts report for September and October, the results of separate house price surveys for September by S&P/Case-Shiller and the Federal House Finance Agency. Consumer confidence readings by the Conference Board and Reuters and the University of Michigan, the Commerce Department's durable goods orders report for October and the Labor Department's jobless claims report will also in the spotlight.

Focus will also be on the crude oil inventories data from the American Petroleum Institute, due Wednesday after the market hours, and the Energy Information Administration due the subsequent day.