NEW YORK, March 20 (UPI) -- The U.S. dollar and Iranian hopes for a "new day" amid ongoing nuclear negotiations sent Brent crude oil prices on a wild ride early in the trading day Friday.
Iranian Foreign Minister Mohammad Javad Zarif continued talks Friday in Lausanne, Switzerland, with his U.S. counterpart, John Kerry. Talks coincide with Nowruz, the start of the Iranian calendar year.
"I hope this new day will be a new day for the entire world -- a new era of greater understanding and peace," Zarif said.
Iranian oil production is limited under the terms of a multilateral agreement reached in November 2013 that allows the Islamic republic some leeway in terms of oil exports in exchange for concessions on nuclear research activity.
Sanctions against Iran may be revised if there's a breakthrough during the current round of talks. Iranian negotiator Ali Akbar Salehi said Monday he was "very optimistic" about the progress so far.
Though obstacles remain in terms of sanctions, Zarif's optimism was enough to push Brent crude oil prices down in early trading Friday. Global oil prices were already hammered this week on word of record-level crude oil in storage in the United States and Brent dropped off briefly before the opening bell on Wall Street but moved into positive territory later to gain 1 percent to $55.60 per barrel.
U.S. data on crude oil inventories pummeled prices earlier this week. The drop off was compounded by statements from Kuwait, a member of the Organization of Petroleum Exporting Countries, that the 12-member group would hold production steady despite the recent decline in oil prices.
Some of the volatility in oil prices may be linked to fluctuations in the value of the U.S. dollar. U.S. Federal Reserve Board Chairwoman Janet Yellen said earlier this week that key interest rates would remain low short term. German Chancellor Angela Merkel's direct intervention late Thursday in ongoing Greek debt talks added further pressure to the greenback.
A research note Friday from ING said the "remarkable strength" of the U.S. dollar was behind some crude oil price movements.
"Given supply cuts and sustained demand strength, we reiterate our price forecast of $65 per barrel for WTI for the second quarter, but remain wary of the dollar freight train," the note said.
The price for West Texas Intermediate, the U.S. benchmark, recovered somewhat from its midweek slump to gain 3.7 percent in early Friday trading to sell for $45.62 per barrel.