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Oil prices slip as Greece and Iran rattle market
[LONDON] Oil prices fell on Thursday as concerns over Greek debt negotiations and the potential easing of sanctions on crude-producing Iran overshadowed strong US demand figures.
North Sea Brent crude oil traded within a fairly narrow range as investors eyed a weak physical crude market in the Atlantic Basin amid reports of healthier demand for gasoline and diesel in the United States and Europe.
But to-the-wire talks between Greece and its international creditors that have thus far failed to yield an agreement raised concerns about the European economy - and thus its expected oil demand.
"All eyes are on Greece," said PVM oil analyst Tamas Varga, adding that for oil, "the risk at the moment is on the downside".
Brent for August fell 30 cents to US$63.19 a barrel by 1345 GMT, after ending the previous day down 96 cents, or 1.5 percent. US crude for August was down 55 cents at US$59.72 a barrel, after finishing Wednesday down 74 cents.
Official prices for Nigerian crude have hit their lowest in at least a decade with as much as 10 million barrels of unsold light, sweet oil capping Atlantic Basin prices.
Relatively strong demand for oil products has helped balance this. US gasoline consumption in the week to June 19 hit the highest seasonal level since 1991, US Energy Information Administration (EIA) data showed.
But the EIA report on Wednesday also said US gasoline stocks had climbed by 680,000 barrels to 218.49 million. A Reuters poll had indicated a 304,000-barrel drop.
Also looming is a June 30 deadline for nuclear negotiations between Iran and world powers that could lift sanctions against the oil-producing nation.
Consultancy Wood Mackenzie estimated Iran could add 600,000 barrels per day (bpd) of crude to global markets by the end of 2017, while Capital Economics said the country could increase its exports post-sanctions by as much as 1 million bpd.
"Even if it does take Iran a year or more to return output and exports to pre-sanctions levels, the anticipation of this additional supply should still affect prices now," Capital Economics said. "The prospect of another 1 million bpd increase in supply from Iran ... could easily drag prices below US$60 again."