Oil Sinks to $56

Oil Sinks to $56Oil Sinks to $56

Oil fell toward $56 a barrel on Wednesday, trading close to a three-month low, as China's accelerating stock market plunge and the Greek debt crisis raised the possibility of weaker economic growth that could hit oil demand.

These concerns compounded downward pressure on prices from the supply side as the prospect of a deal on Iran's nuclear work raised the possibility of more supply reaching a market many analysts see as already having too much oil.

Brent crude fell 66 cents to $56.19 a barrel by 0843 GMT, having traded as low as $55.10, the weakest level since April 6, on Tuesday. US crude was down 57 cents at $51.76, Reuters reported.

"The three main drivers pushing prices down are the steep fall in equities in China, with the implications that has for oil demand; the possibility of a nuclear agreement with Iran and the Greece crisis," said Christopher Bellew, senior broker at Jefferies Bache.

In Vienna, Iran and six world powers gave themselves at least until Friday to negotiate an agreement on the Tehran nuclear program which would lift sanctions against the country.

A deal could result in an increase in Iran's oil exports, which would add to output from the Organization of the Petroleum Exporting Countries already at a three-year high without cutbacks by other OPEC members.