Oil holds losses below $60 as nuclear talks set to miss deadline

BEN SHARPLES

NEW YORK (Bloomberg) -- Oil held losses below $60/bbl as investors weighed the prospects of Iran increasing crude exports in an oversupplied market.

Futures were little changed in New York after falling 2.2% on Monday amid concern financial turmoil in Greece will prompt its exit from the euro area. While a June 30 deadline for a nuclear accord with Iran is set to be missed, U.S. and European diplomats meeting in Vienna said a path to a comprehensive agreement can be reached within days.

Oil is headed for its first monthly drop since March as the Greek crisis prompted investors to avoid risky assets, while signs of a global glut persist. Iran, OPEC’s fifth-largest producer, has estimated it can double exports from about 1 MMbopd within six months if international sanctions are lifted.

“Global supply is still high so if we see extra oil from Iran, it could be a problem,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “We’ve been quite positive on the price but it could start to look a little bleak, especially if Europe starts to contract again if there’s a contagion affect out of Greece.”

West Texas Intermediate for August delivery was at $58.23/bbl in electronic trading on the New York Mercantile Exchange, down 10 cents. The contract declined $1.30 to $58.33 on Monday. Total volume was about 80% below the 100-day average. Prices have decreased 3.5% this month.

The U.S. benchmark crude has advanced 22% since the end of March, set for the first quarterly gain in a year, and is up 9.2% in 2015.

U.S. Stockpiles

Brent for August settlement was 3 cents lower at $61.98/bbl on the London-based ICE Futures Europe exchange. It slid $1.25 to $62.01 on Monday. The European marker grade traded at a premium of $3.69 to WTI.

Crude inventories in the U.S., the world’s biggest oil consumer, probably shrank by 2.5 MMbbl through Jun. 26, according to the median estimate in a Bloomberg survey of nine analysts before government data Wednesday. While supplies have fallen the previous eight weeks to 463 MMbbl, they’re still 84 MMbbl above the five-year average level of this time of the year.