Oil futures: Oil prices rebound after steep falls, down 2% on day

London (Quantum Commodity Intelligence) – Crude oil futures tumbled more than 2% in US trading hours Thursday, as a soaring dollar and a report of progress on the Iranian nuclear talks triggered profit-taking.

The US dollar index against a basket of other currencies rallied by almost 1% Thursday, while Bloomberg quoted Iran's Deputy Foreign Minister Abbas Araghchi saying the country had come closer than ever before in reaching an agreement to revive the 2015 nuclear deal.

Front-month August Brent futures were trading at $72.78/barrel (1753 GMT), compared to Wednesday's settle of $74.39/b.

At the same time July WTI was trading $70.58/b, versus Wednesday's settle of $72.15/b.

The soaring US dollar and reports of progress on the Iran front appear to have triggered a huge wave of selling among funds looking to exit significant long positions, as oil tumbled 3%, or $2/b on the day at one point for Brent to $72.04/b, before rebounding.

Net-length in WTI futures and options was 410,000 lots as of last Tuesday, the highest in almost three years, while similar long positions in Brent hit 290,745 lots - the highest level in four weeks and the biggest weekly build since January.

That left some sources speculating a bout of profit taking was due on any talk of an Iran deal.

Earlier Thursday London-based Eagle Commodities Brokers said, "the USD is much firmer today, acting as a drag on crude, following the Fed indicating on Wednesday that interest rates could be lifted quicker than the market had initially expected,"

A stronger dollar is typically negative for oil markets, which are traded in USD on international markets.

Iran's Presidential elections take place Friday.

Investors and analysts have largely dismissed any possibility of a last-minute pre-election deal after last weekend's talks in Vienna failed to find a breakthrough.

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