Oil prices jumped over 5 percent on Monday as traders reassessed how quickly Iran might increase exports after a preliminary nuclear deal and anticipated that a months-long rise in U.S. crude inventories may be slowing.
Brent crude tumbled nearly 4 percent on Thursday after Iran and six world powers announced a framework agreement on the OPEC member's nuclear program. But initial expectations of a quick recovery in oil exports were tempered by views that it could longer than expected to roll back sanctions.
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"People betting on Iran's oil arriving tomorrow realize they may have to wait up to a year," said Phil Flynn, analyst at Price Futures Group in Chicago.
Oil extended gains after industry intelligence group Genscape reported that stockpiles at Cushing, Oklahoma, barely rose last week, according to traders. It would be the smallest increase since November at the delivery point for the U.S. crude contract traded on the New York Mercantile Exchange.
Brent May crude <LCOc1> was up $3.08, or 5.6 percent, to $58.03 a barrel at 1:01 p.m. EDT (1701 GMT), having reached $58.20 intraday.
U.S. May crude <CLc1> was up $2.78, or 5.7 percent, at $51.92 a barrel, just below its $51.95 intraday peak.
A weaker dollar following Friday's disappointing U.S. jobs report for March buoyed crude oil prices on Monday.
Also supportive to the market was news that top exporter Saudi Arabia raised the prices for all the crude oil grades it will sell to Asia in May, raising prices a second straight month.
Concerns over conflict in Yemen supported prices, as fighting between a Saudi-backed coalition and Shi'ite Houthi forces continued.
Iran's foreign minister said on Saturday that U.N. sanctions would be lifted immediately after a deal, but the United States released a fact sheet on Thursday saying that sanctions would be lifted as Tehran demonstrates compliance with any deal.
"Both sides will describe the deal differently," said Olivier Jakob of Swiss-based consultancy Petromatrix.
Uncertainty remains about exactly when sanctions on Iran would be lifted if a deal is reached in June.
"While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles," Morgan Stanley analysts said in a research note.
"Even if a final deal is reached, we do not expect any physical market impact before 2016," the analysts said.
(Additional reporting by Catherine Ngai in New York, Himanshu Ojha in London and Jacob Gronholt-Pedersen and Florence Tan in Singapore; editing by Hugh Lawson and G Crosse)