Oil fell on Thursday after comments by Iran's president stirred perceptions he could be seeking better relations with the West, easing geopolitical concerns.
Further weakness came as Libyan crude oil production surged back following protests that had disrupted the OPEC nation's oil supplies since last month.
Iranian President Hassan Rouhani said that his country was not seeking war, that Iran would never seek to develop a nuclear weapon, and that he has authority to negotiate a deal with the United States.
Tehran and the West have been at odds over Iran's nuclear ambitions for most of the last decade, leading to sanctions that cut the OPEC members exports and creating concerns that supplies from other producers nearby could be impacted.
The prospect of easing tensions and higher supplies depressed oil prices, even as othercommodities and equities rose after the United States Federal Reserve surprised markets by deciding it would keep its monetary stimulus program intact.
"There's a growing realization with the Libyan barrels back on the market and the potential for Iranian oil to come back that we're going to see the international benchmark (Brent) come under pressure," said John Kilduff, a partner at Again Capital LLC in New York, adding that Saudi Arabia's production was at near-record levels as well.
Easing fears of a U.S.-led military strike on Syria also helped to dampen prices, with Western powers meeting for a second day of talks on their draft resolution on eradicating Syria's chemical arsenal.
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