May 22 (Bloomberg) -- Crude slipped as Iran agreed to let in United Nations nuclear inspectors, easing concern that the conflict over the country’s atomic energy program would disrupt Mideast supplies.
Prices fell 1 percent after Yukiya Amano, secretary-general of the UN’s International Atomic Energy Agency, announced the accord with Iran today in Vienna. The Organization for Economic Cooperation and Development said Europe’s debt crisis risks spiraling and seriously damaging the world economy.
“The Iran agreement is certainly a positive step and is likely to result in continued relaxation of the Iran fear premium,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “Europe is still a big concern.”
Oil for June delivery slid 91 cents to settle at $91.66 a barrel on the New York Mercantile Exchange. The contract expired at the close of floor trading today. The more actively traded July contract fell $1.01, or 1.1 percent, to $91.85. Front-month futures are down 7.3 percent this year. Prices have fallen for 14 of the past 17 days.
Prices were little changed after industry-funded American Petroleum Institute said U.S. oil stockpiles gained 1.48 million barrels to 386.2 million last week, the highest level since July 1990. The July contract slid $1.26, or 1.4 percent, to $91.60 a barrel.
Brent oil for July settlement declined 40 cents, or 0.4 percent, to $108.41 a barrel on the London-based ICE Futures Europe exchange.
The agreement between Iran and UN agency will be signed “quite soon,” Amano told journalists in Vienna after returning from Tehran, where the deal was reached yesterday.
International negotiators are set to head to Baghdad tomorrow for a second round of talks over Iran’s nuclear program. The first discussions in 15 months between the U.S., the U.K., France, China, Russia, Germany and Iran were held April 14 in Istanbul.
“We urge Iran to take this opportunity to resolve all outstanding concerns about the nature of its nuclear program,” Robert Wood, the U.S. envoy to the international organizations in Vienna, said in an e-mailed statement. “Full and transparent cooperation with the IAEA is the first logical step.”
While UN inspectors regularly visit sites where Iran enriches uranium, the agency has been seeking more access to facilities suspected of hiding undeclared nuclear work. It’s the first time since 2007 that the Islamic republic, which says its atomic work is for peaceful purposes, has accepted a proposal from the UN to boost cooperation and allow wider inspections.
“Achieving full compliance is really the challenge,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “I’ll believe it when I see it.”
Oil prices rose earlier this year as tightening sanctions on Iran curtailed the country’s exports to Europe and raised the threat of a possible interruption of oil tanker traffic in the Persian Gulf. Iran is the second-biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
“The Iran agreement took some tensions off the market and that’s what caused the oil decline,” said Phil Streible, a Chicago-based commodities broker at RJO Futures. “We also saw weaker OECD economic growth outlook, which is weighing in on oil prices.”
Prices also fell on concern the European debt crisis will hurt oil demand.
“The risk is increasing of a vicious circle, involving high and rising sovereign indebtedness, weak banking systems, excessive fiscal consolidation and lower growth,” OECD Chief Economist Pier Carlo Padoan wrote in the organization’s semiannual report on the global economy.
Gross domestic product in the euro region will shrink 0.1 percent this year and expand 0.9 percent in 2013 instead of posting growth of 0.2 percent and 1.4 percent as predicted last November, the Paris-based OECD said today.
Oil prices reduced losses after the National Association of Realtors reported sales of existing U.S homes rose in April for the first time in three months.
U.S. crude inventories probably rose 1.65 million barrels last week, a Bloomberg News survey showed before an Energy Department report tomorrow. It would be the ninth week of gains. Gasoline supplies probably fell 650,000 barrels and distillate fuels, which include heating oil and diesel, dropped 500,000, according to the survey.
Electronic trading volume on the Nymex was 390,850 contracts as of 4:34 p.m. in New York. Volume totaled 448,119 contracts yesterday, 24 percent below the three-month average. Open interest was 1.46 million, the lowest level since Feb. 22, 2012.
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