Oil prices steady after glut-driven losses, Iran eyed

By Karolin Schaps

LONDON (Reuters) - Oil prices steadied on Thursday after a day of steep losses driven by an unexpected build in U.S. crude stocks that added to a global supply glut.

Traders were keeping a close eye on nuclear talks between Western powers and Iran, looking for any sign of a deal to lift sanctions on the oil-rich nation.

Oil regained some ground in early London trade, but steadied around Wednesday's closing levels later in the morning as the mood remained cautious ahead of Sunday's Greek referendum on the country's bailout terms.

Brent futures were trading 29 cents higher at $62.30 per barrel at 0946 GMT. Front-month U.S. crude futures were up 6 cents at $57.02 per barrel.

Prices had slumped between 2.5 and 4 percent on Wednesday after a surprise weekly rise in U.S. crude inventories, the first build since April.

The stock increase came on the back of strong U.S. production.

"Overall, production was supported by increased output from the Gulf of Mexico," Barclays said in a note following the publication of the data.

Outside the United States, supply from the Organization of the Petroleum Exporting Countries rose to a three-year high of 31.60 million barrels per day (bpd) in June, up from 31.30 million bpd in May.

"We are going into the second half of this year with a heavily oversupplied fundamental picture which makes any bullish price forecast hard to accept," oil market analysts at PVM Oil Associates wrote.

"It is difficult to avoid reminding oneself that the bigger the inflated bubble grows the louder the bang when it bursts."

(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson)