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Oil falls from 1-week high as Iran seen closer to export boost
[SEOUL] Oil fell from the highest price in a week amid speculation Iran is moving closer to boosting crude exports after United Nations monitors ended a probe of the Islamic Republic's research into atomic-weapon technologies.
Futures dropped as much as 1.7 per cent in New York. The International Atomic Energy Agency in Vienna closed its investigation after reporting this month Iranian scientists had experimented with nuclear-bomb technologies without ever taking the final steps needed to produce a weapon. US crude stockpiles gained by 2.3 million barrels last week, American Petroleum Institute data was said to show.
Oil is trading near levels last seen during the global financial crisis after the Organisation of Petroleum Exporting Countries (Opec) effectively abandoned production limits to defend market share. Group member Iran is seeking to increase crude sales when international sanctions over its nuclear program are removed. US inventories are more than 120 million barrels above the five-year seasonal average, according to the Energy Information Administration.
"Sanctions against Iran can be lifted as soon as January as the IAEA ended its 12-year probe into the Islamic nation's nuclear research, which can put downward pressure on oil," said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. "If US supplies expanded, it can be a strong bearish factor because seasonally it's the time for stockpiles to shrink." Nuclear Probe WTI for January delivery declined as much as 62 US cents to US$36.73 a barrel on the New York Mercantile Exchange and was at US$36.92 at 11:25 am in Seoul. The contract climbed US$1.04 to US$37.35 on Tuesday. The volume of all futures traded was about 27 per cent below the 100-day average. Prices are down 31 per cent this year, set for a second annual loss.
Brent for February settlement slid as much as 35 US cents, or 0.9 per cent, to US$38.38 a barrel on the London-based ICE Futures Europe exchange. The January contract, which expires Wednesday, was 33 US cents lower at US$38.12. The European benchmark crude closed Tuesday at a US$1.10 premium to WTI, the least since January.
While not all of the IAEA investigators' suspicions were resolved, the agency's 35-member board of governors said Iran didn't divert nuclear material to weapons use and stopped military-related activities in 2009. There's "absolutely no chance" the Persian Gulf country will delay its plan to accelerate crude exports, Amir Hossein Zamaninia, the deputy oil minister for international and commerce affairs, said Dec 13.
US crude inventories probably decreased by 1.5 million barrels through Dec 11 for a second weekly decline, according to the median estimate in a Bloomberg survey of 11 analysts before EIA data Wednesday. Stockpiles previously dropped 485.9 million barrels as some refiners in the Gulf Coast were said to drain tanks to reduce their tax burden, which is determined by year-end storage.