LONDON (Reuters) - Brent crude oil futures reversed early losses to rally to $55.90 a barrel on Wednesday, as talks over Iran's nuclear programme continued, curbing expectations of an immediate deal that would allow Iranian crude on to the market.
The Iran talks overshadowed a sharp rise in crude oil stocks in the United States, where inventories rose by 4.8 million barrels to 471.4 million barrels in the week to March 27, according to the United States Energy Information Agency (EIA). [EIA/S]
Brent crude for May delivery LCOc1 was up 80 cents at $55.91 a barrel by 1445 GMT, after earlier touching a session low of $54.70.
U.S. crude for May delivery CLc1 was trading 97 cents higher at $48.57 a barrel.
Talks between Iran and six world powers in the Swiss city of Lausanne to settle a dispute around Tehran's nuclear programme extended past a Tuesday deadline into Wednesday.
Talks had appeared to get bogged down due to Russian concerns over the use of a "snapback", an automatic reversal of any proposed easing of U.N. Security Council sanctions if Iran fails to comply with the terms of an agreement.
"A lot of people were expecting the deal to be done overnight and Iran to be pumping a million barrels tomorrow. That's not going to be the case," said Amrita Sen, chief oil analyst at Energy Aspects.
"Everybody's been lowering expectations and I think that's feeding into prices," she said.
German Chancellor Angela Merkel said that while much progress had been made, the talks would only end when agreement was reached on all points. French Foreign Minister Laurent Fabius said the talks were not sufficiently advanced to ensure a quick conclusion.
Iranian senior nuclear negotiator, Abbas Araqchi, said Iran hoped to wrap up talks by Wednesday night.
"We insist on lifting of financial and oil and banking sanctions immediately ... for other sanctions we need to find a framework," he told Iranian state television.
Iran produces about 2.8 million barrels per day (bpd), according to a Reuters survey, although Western sanctions limit exports to 1 million bpd. It keeps about 30 million barrels on its fleet of tankers ready to be sold, if possible.
Higher OPEC supply weighed on oil prices early on, after a Reuters survey showed the oil cartel increased supply in March by 560,000 bpd to its highest since October. Iraq's exports rebounded after bad weather and Saudi Arabia pumped at close to record rates.
(Additional reporting by Jacob Gronholt-Pedersen in Singapore; Editing by David Clarke and David Holmes)