Oil prices slip under $55 as Iran talks extend beyond deadline

LONDON (Reuters) - Brent crude oil futures slipped below $55 a barrel on Wednesday on speculation that a last-minute deal over Iran's nuclear program would be reached, opening the way for more Iranian crude to come into world markets.

Talks between Iran and six world powers to settle a dispute around Tehran's nuclear program extended beyond a Tuesday deadline.

Efforts to reach a framework deal were scheduled to continue on Wednesday morning in the Swiss city of Lausanne.

Brent crude for May delivery was down 31 cents at $54.80 a barrel by 5.02 a.m. ET.

U.S. crude for May delivery was trading 53 cents lower at $47.07 a barrel.

A German delegation source said on Wednesday there was no agreement yet, but one was possible "if there is good will on all sides."

British Foreign Secretary Philip Hammond said on Wednesday progress had been made between Iran and major powers over its disputed nuclear program, but that key issues still needed to be resolved.

Talks had appeared to get bogged down after the United States warned it was ready to abandon them altogether and Iran affirmed its "nuclear rights", with officials cautioning any agreement would probably be fragile and incomplete.

"If you get an agreement, there is the likelihood of Iranian oil being allowed to hit an already oversupplied oil market and drive prices lower," said Michael Hewson, chief markets analyst at CMC Markets.

Iran currently produces around 2.8 million barrels per day (bpd), according to a Reuters survey, although Western sanctions limit exports to 1 million bpd. It keeps around 30 million barrels of crude on its fleet of oil tankers ready to be sold if possible.

Higher OPEC supply also put pressure on oil prices, after a Reuters survey showed the oil cartel increased supply in March to its highest since October. Iraq's exports rebounded after bad weather and Saudi Arabia pumped at close to record rates.

U.S. crude inventories rose for the 12th straight week by 5.2 million barrels, in the week to March 27, according to data from the American Petroleum Institute. Official stockpile data is due out on Wednesday at 10.30 a.m. ET. [API/S]

(Additional reporting by Jacob Gronholt-Pedersen in Singapore; Editing by William Hardy)