Brent crude oil prices rose more than $1 per barrel on Monday after Iran and six world powers fell short of reaching a deal on Tehran's nuclear program.
Sanctions against Iran have helped support Brent prices by removing more than 1 million barrels per day (bpd) of oil from world markets. Any rise in Iranian supply could push oil prices lower, analysts say.
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Talks between Iran and western nations will resume on Nov. 20. In the meantime, Iran said it would allow United Nations inspectors "managed access" to a uranium mine and heavy-water plant within three months.
"If we do get an agreement, where they ease some of the sanctions, you'll see that reflected in the price of Brent," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut. "Time will tell whether the Iranians will let people in to explore their nuclear sites."
Brent settled $1.28 per barrel higher at $106.40, after trading as high as $106.47. On Friday, Brent hit a four-month low, then rebounded to close the day up $1.66 but posted a fourth straight weekly decline.
U.S. crude settled 54 cents higher at $95.14 a barrel, after touching a high of $95.38. The contract breached the 10-day moving average of $95.26 in intraday trading for the first time in three weeks.
Brent prices was supported by traders covering short positions ahead of the December contract expiry on Thursday. Money managers cut their net long position for the second week in a row, government data showed on Friday.
"Ultimately we were oversold," said Rich Ilczyszyn, chief market strategist at iitrader.com in Chicago. "We're getting close to expiration. If you're short, you have to buy it back."
Brent's premium over U.S. oil futures
Oil also got a lift from stronger gasoline prices. The front-month RBOB contract settled above the 10-and-15 day moving averages, 4.31 cents higher, at $2.5965 per gallon.
Oil was also supported by a weaker dollar. The dollar index was off a two-month high and down 0.3 percent at 81.092. A weaker dollar makes commodities priced in the greenback less expensive for overseas investors.
Talks that included the United States, Russia, China, Britain, Germany, France and Iran ended in Geneva on Saturday failing to produce an agreement on Iran's nuclear program.
France hinted the proposal under discussion did not sufficiently neutralize the threat of an Iranian nuclear bomb. British Foreign Secretary William Hague said there will be pressure to intensify sanctions on Iran if no nuclear deal is reached.
U.S. Secretary of State John Kerry said he hoped an agreement on Iran's disputed nuclear program would be signed within months.
Oil found some support from Chinese data pointing to higher fuel demand as the economy there accelerates. China's implied oil demand inched up 0.3 percent in October from a year earlier.
In Libya, tensions remained high after an autonomy movement in the east said on Sunday it had formed a regional oil company to start selling crude after seizing several ports.
U.S. OIL DATA DELAYED
Key U.S. oil inventory data this week will be delayed a day by the Veterans Day holiday on Monday.
Industry group the American Petroleum Institute will release oil inventory data on Wednesday at 4:30 p.m. EST and the U.S. Energy Information Administration will publish its data on Thursday at 11:00 a.m.
U.S. crude oil stockpiles were seen rising by 1.6 million barrels last week, while distillates and gasoline inventories were expected to have declined, according to a preliminary poll of Reuters analysts.
(By Jeanine Prezioso; Additional reporting by Christopher Johnson in London and Jacob Gronholt-Pedersen in Singapore; Editing by Marguerita Choy and Bob Burgdorfer)