Brent crude dips as Iran, West plan July talks
(Reuters) - Brent crude edged lower on T uesday on relief that negotiations to defuse the dispute over Iran's nuclear program led to plans for technical talks in July, while hopes for more monetary stimulus from the Federal Reserve helped lift U.S. crude.
While Iran's two-day talks with world powers did not resolve differences on Tuesday, the parties agreed to hold a technical follow-up meeting in Istanbul on July 3.
"It is significant that Iran agreed to meet after the European Union embargo (on Iranian oil) begins. There was definitely a growing sense that they were at their breaking point, ready to walk out," said John Kilduff, partner at Again Capital LLC in New York.
Brent fell to a 17-month low before Spain managed to sell debt at its latest auction. Then, Brent steadied even though Spain's borrowing costs rose and the threat of a spreading debt crisis lingered as Greek political parties tried to form a government.
U.S. crude bounced after support held again near $82 a barrel. It settled higher on expectations that weekly inventory reports will show U.S. crude oil stocks fell again last week, especially at the Cushing, Oklahoma, hub.
Oil and U.S. equities received a lift from hopes for more monetary stimulus from the U.S. Federal Reserve, though equities pared gains after a German official said there were no discussions at the Group of 20 meeting about plans to use European Rescue funds to buy bonds of crisis-hit members.
The U.S. central bank's Federal Open Market Committee will release a policy statement on Wednesday at the end of a two-day meeting. Some investors remain hopeful that the Federal Reserve will unveil some form of additional stimulus to support a flagging recovery.
Brent August crude fell 29 cents to settle at $95.76 a barrel, after slumping to $94.44, the lowest intraday price since Jan. 10, 2011.
Brent has retreated more than 25 percent from its 2012 peak above $128 a barrel struck in March.
U.S. July crude rose 76 cents to settle at $84.03, having traded from $82.28 to $84.41 ahead of the July contract's expiration on Wednesday.
U.S. August crude gained 75 cents to settle at $84.35 a barrel.
Total Brent crude trading volumes outpaced U.S. turnover and Brent volume was 5 percent above the 30-day average. U.S. volume lagged its 30-day average by 9 percent.
Brent's premium to U.S. crude slipped to $11.53 a barrel based on August settlement prices. The $11.36 intraday low was the weakest the premium has been since Jan. 31.
The Brent/U.S. crude spread has narrowed in reaction to the mid-May reversal of the Seaway pipeline, allowing U.S. crude to be brought from the Cushing, Oklahoma, storage hub to the refinery-rich Gulf Coast.
Enbridge Inc said late on Monday that it expects to complete an expansion of the pipeline by the end of the year.
The most recent U.S. government data showed total crude stocks fell and inventories at Cushing, delivery point for the U.S. light sweet crude contract, fell in the week to June 8, with the Cushing stocks slipping from a record high level.
U.S. OIL INVENTORIES
After oil settlement prices were posted, industry group the American Petroleum Institute released data showing U.S. weekly crude stocks fell 550,000 barrels last week, less than forecast.
Crude stocks at Cushing rose 625,000 barrels, gasoline stocks rose 1.1 million barrels and distillate inventories fell 269,000 barrels, the API said.
Ahead of weekly reports from industry and government, crude stocks were expected to have fallen 1.1 million barrels, a Reuters survey of analysts showed.
Both gasoline and distillate stocks were expected to be up 800,000 barrels.
The inventory report from the U.S. Energy Information Administration is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.
TENSIONS ABOUT IRAN
The two-day talks in Moscow did not secure a breakthrough, but Iran's chief negotiator said he hoped a new round of diplomacy would be agreed to after the July technical follow-up meeting.
European Union foreign policy chief Catherine Ashton said that significant differences remained.
The talks between Iran and six major powers: the United States, China, Russia, Germany, France and Britain are aimed at defusing a dispute over Tehran's nuclear work, which the United Nations and the West fear is designed to produce nuclear arms.
Tehran has repeatedly denied the assertion.
A European Union embargo on Iranian crude oil is set for July, but higher output from Saudi Arabia, Iraq and post-Gaddafi Libya has helped keep global supply ample, even as Iran's customers look for alternatives to Tehran's barrels.