Oil Prices Fall as Iran Nuclear Deal Seems Likely

 Oil prices fell on Monday as Iran and six world powers were close to nailing down a nuclear deal, but high Chinese crude import figures checked further losses.

Worries of Iran adding to a global oil surplus, at a time when the demand outlook could potentially weaken given a slump in China's equity markets and the ongoing Greek debt crisis, have led several analysts to say that crude would fall further.

Iran and six world powers are reportedly on the brink of finding a nuclear deal that would bring sanctions relief in exchange for curbs on Tehran's nuclear programme.

US crude prices were down 85 cents at $51.89 a barrel at 0433 GMT (10:03 a.m. in India). Brent crude fell more than dollar to $57.65 a barrel on worries a deal with Iran would lead to an easing of sanctions against Tehran and to higher crude exports.

"If a deal is confirmed, we may see support broken and the next test at $49.5 (for US crude)," CMC Markets said.

Although analysts said it would take until 2016 before Iran would be able to return to full-scale exports, most estimate that a jump of around 200,000 barrels per day in exports could be seen in the short term, adding to a current surplus of more than 2.5 million barrels a day.

However, Chinese customs data showing the country's crude imports in the first half of the year rose 7.5 per cent from a year ago helped put a floor under oil prices, despite analysts saying the increase in arrivals was more due to stockpiling of strategic reserves than a real rise in demand.

In Europe, the Greek debt crisis continued as political leaders argued late into the night at an emergency summit, so far without result.

With oversupply ongoing and abundant economic risk, the International Energy Agency (IEA) and several banks said they had lowered their oil price forecasts.

"The bottom of the market may still be ahead," the IEA said in its monthly report.

Bank of America Merrill Lynch said US crude prices "could soon drop well below our $50 per barrel target in 3Q15".

Commerzbank said that a fall below $55 per barrel in Brent and below $50 per barrel in US crude was "conceivable".

During the 2,650 trading sessions since 2005, US crude prices have spent only 178 days (7 per cent) of the time below $50 - first in early 2005 when prices began to rise away from historically lower levels, then during the post-2008 global financial crisis and then in current period of oversupply.