By Barani Krishnan
NEW YORK (Reuters) - Oil prices fell on Thursday as focus returned to talks for a nuclear pact between Tehran and global powers that could put millions of additional Iranian crude barrels onto a market already brimming with supply.
Crude prices fell as much as 3 percent as the marathon talks in Lausanne, Switzerland extended for a second day past its original deadline for a deal, before a weak dollar pared some of the losses.
"There are positive signs that a deal will be done for Iran with the talks continuing past the deadline, and that's weighing again on oil today," said Joseph Posillico, senior vice president of energy futures at Jefferies in New York.
Iranian Foreign Minister Mohammad Javad Zarif said "significant progress" had been made at the talks. Diplomats said the chances of a preliminary accord in the next few hours were finely balanced.
U.S. crude futures were down 73 cents, or almost 1.5 percent, at $49.36 a barrel in New York by 10:18 a.m. EDT, after falling more than $1.70 earlier.
Futures for London-traded North Sea Brent crude, the more widely-used global benchmark for oil, were down $1.36 to $55.74 a barrel. It fell more than $2 at the session low.
U.S. crude rose 5 percent on Wednesday and Brent about 4 percent, rebounding from three days of losses, after U.S. government data showed the first weekly decline since January in crude production even as crude stocks hit new highs. [EIA/S]
On Thursday, separate data from the U.S. government showed crude oil exports fell to 428,000 barrels per day in February compared with 491,000 bpd in January.
(Additional reporting by Christopher Johnson in London and Jacob Gronholt-Pedersen in Singapore; Editing by Marguerita Choy)