Oil prices fell in Asian trade on Thursday, with traders taking out some risk premium after the U.S. and Iran confirmed that talks between the two will take place on Friday.
Oil was also pressured by strength in the dollar, which firmed ahead of key central bank meetings in Europe and the UK on Thursday.
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Crude prices reversed course after a strong session on Wednesday as traders locked in some profits. But oil was also still trading down for the week, having earlier tumbled amid a broader rout in commodity markets.
Brent oil futures for April fell 1.4% to $68.50 a barrel, while West Texas Intermediate crude futures fell 1.3% to $63.80 a barrel by 20:42 ET (01:42 GMT).
Oil had taken support from data showing U.S. inventories shrank more than expected in the past week, as extreme cold weather disrupted production across the country.
US-Iran talks to take place in Oman on Friday U.S. and Iranian officials are set to meet in Oman on Friday, officials from both sides confirmed this week, although there still remain disagreements over the agenda of the negotiations.
Washington has repeatedly insisted that the negotiations include Tehran’s missile arsenal, while Iran said it will only discuss its nuclear program.
Disagreements over the agenda had earlier sparked doubts whether the talks would even take place– a notion that boosted oil prices earlier in the week.
Markets were also seen pricing in a greater risk premium into crude amid concerns that U.S. President Donald Trump will make good on his threats to launch fresh strikes against Iran.
Dollar strength weighs with ECB, BOE meetings in focus Strength in the dollar also pressured oil prices, as the greenback caught an increasing number of bids this week.
Anticipation of interest rate decisions by the Bank of England and the European Central Bank on Thursday saw traders pile into the dollar, while focus was also on key upcoming U.S. nonfarm payrolls data.
The dollar rose sharply from near four-year lows this week after Trump’s nomination of Kevin Warsh as the next chairman of the Federal Reserve. Warsh was viewed as the less dovish pick.
Nonfarm payrolls data for January is due next week and is expected to provide more clear cues on the world’s largest fuel consumer.
