By Henning Gloystein
SINGAPORE (Reuters) - Oil prices fell on Monday as the market focused on whether Iran and six world powers would reach a deal that could add fuel to an already oversupplied market if sanctions against Tehran are lifted.
The two sides tried to break an impasse in nuclear negotiations on Sunday ahead of a deadline to find a preliminary agreement by Tuesday, exploring compromises in a number of areas.
"Any relaxation of Iran oil sanctions could see increased exports adding to swelling global supplies and further pressuring prices," ANZ said on Monday.
Benchmark Brent crude futures
Brokerage Phillip Futures said that it expected oil prices to fall to $50-53 for Brent and $46-48 for U.S. crude in the second quarter.
Analysts said that weak demand and a strong dollar were also weighing on prices.
"Demand growth in the OECD has been in structural decline over the past five years ... (and) continued dollar strength is a headwind to the oil price recovery," Barclays said, adding that it saw the dollar rising slightly above parity with the euro by the fourth quarter of this year, up from $1.087 for each euro currently.
A potential climb in prices could come from an OPEC production cut, which some members have lobbied for but its biggest exporter Saudi Arabia has resisted.
"Saudi Arabia had to cut its price in Asia to ensure its crude oil remained attractive," energy consultancy Wood Mackenzie said.
"Other suppliers looking to position themselves in Asia will have to pay close attention to the Saudi's pricing strategy," it added. This would also include Iran should sanctions be eased.
Morgan Stanley said that crude demand outlook would also be dented via the refinery sector, where production tends to fall towards the middle of the year.
In the United States, the oil rig count continued to fall although analysts said that lower drilling activity would only affect oil production later this year.
"The current rig count is pointing to U.S. production declining slightly sequentially in 2Q15 and 3Q15," Goldman Sachs said although it added that activity could bounce back in 2016 as drillers had raised equity and benefited from falling production costs.
(Editing by Joseph Radford and Richard Pullin)
