Investing.com -- Crude futures fell sharply on Monday plunging to monthly low, as stalled negotiations regarding the Iranian Nuclear deal and the Greek Debt crisis continued to weigh.
On the New York Mercantile Exchange, WTI crude for August delivery fell 1.35 or 2.24% to 58.30 a barrel. At one point, Texas Long Sweet futures dipped to a session-low of 58.04, its lowest level since June 5.
On the Intercontinental Exchange (ICE), brent crude for August delivery dropped 1.28 or 2.02% to 61.98 a barrel. On Monday, brent futures traded between 61.36 and 62.96, moving lower for the fourth time in five sessions. The spread between the international and U.S. domestic benchmarks of crude stood at 3.68, slightly above Friday's level of 3.63.
In Washington, White House press secretary Josh Earnest told reporters it is likely that negotiations with Iran aimed at reaching a final agreement on a comprehensive nuclear deal will likely extend past Tuesday's deadline. The two sides reportedly remained at odds on the pace of easing longstanding economic sanctions once a deal is reached. U.S. president Barack Obama has until July 9 to present the deal to Congress for review. Western powers would like the sanctions against Iran to be removed gradually, while Iran president Hassan Rouhani has argued for immediate removal of the crippling restrictions.
An easing of sanctions is viewed as bearish for crude, as a deal could enable Iran to release millions of barrels of crude reserves into a global market already saturated by excessive supply. Iran reportedly has 30 million barrels of crude in reserves ready for export once the sanctions are lifted.
While Opec supply has reached record-highs throughout 2015, its market share has been dented due in part to a surge in U.S. shale production over the last year. Last year, Opec's global market share fell to 41.8% from 43.3 in 2013, representing its lowest share since 2003, according to Bloomberg. In spite of steady declines throughout the spring, U.S. crude output moved back above 9.6 million barrels per day last week, bolstered by a 76,000 gain among the lower 48 states.
Energy traders remained focused on the impact of currency fluctuations on the price of crude, amid debt crises in Greece and Puerto Rico. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to an intra-session high of 96.69 before falling back sharply to 95.07. In overnight trading EUR/USD plummeted below 1.096, before rallying to 1.183 on in the U.S. morning session.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
Germany chancellor Angela Merekel reiterated the importance of holding the euro together if Greece leaves the area, while adding that the euro zone is in better position to cope with contagion than it had been during a previous Greek debt crisis several years earlier. Earlier, a Greek government official reportedly said that Athens will not make a €1.6 billion repayment to the IMF on Tuesday, a bundled payment of four loans it owed during the month of June.