NEW YORK—Oil prices fell below $68 a barrel on Friday on news Iran and the European Union were getting closer to an agreement on Tehran's nuclear program.
The losses were tempered by a string of refinery outages in the United States that have drained gasoline inventories leading into the summer driving season.
London Brent crude, currently seen as more representative of global oil prices than U.S. oil, fell 64 cents to $67.93 a barrel by 1800 GMT. U.S. crude fell 64 cents to $65.20 a barrel.
The weakness came after Iran's chief nuclear negotiator Ali Larijani said differences with the European Union over its nuclear program were gradually narrowing.
The oil markets have been underpinned by concern that Iran's face-off with the West could lead to supply disruptions from the world's fourth biggest oil exporter.
"The market has been so focused on gasoline that it has forgotten a bit about Iran," said Olivier Jakob of Petromatrix. "But now there seems to be some softening in the approach."
Representatives from Iran and the European Union are due to meet again in two weeks.
News on Thursday afternoon of a fire at Marathon's Garyville, Louisiana, refinery briefly pushed crude into positive territory by rekindling worries of a gasoline supply crunch when drivers hit the roads for summer vacation.
Unplanned outages and refinery maintenance helped drain U.S. gasoline stocks again last week, leaving inventories 15 percent below early February levels, according to U.S. government data released on Wednesday.
But dealers added that lower refinery operations could also translate into rising stockpiles of crude oil, as plants require less of the feedstock during downtime.
"The rally's running out of gas even though we're running out of gas," said John Kilduff, senior vice president for energy risk management at Man Financial.
Prices have also drawn support from a flare-up in violence in OPEC-producer Nigeria following weekend elections that observers say were rigged.
Nigeria has lost 600,000 barrels per day of output for over a year, though Nigerian officials say more than half that volume will be restarted by the end of May.
Feeds