Oil Declines a Second Day on Europe Concern, Iran Talks

Oil fell a second day in New York after Greek leaders said they would form a group to renegotiate austerity measures and borrowing costs in Spain increased, threatening economic growth in Europe.
Futures slid as much as 1.2 percent. Evangelos Venizelos, the head of Greece’s Pasok party, said the nation will attempt to renegotiate some terms attached to its bailout. Spain’s borrowing costs surged at its first auction since seeking a bailout. Talks with Iran, OPEC’s second-largest producer, resume today in Moscow over the country’s nuclear program, with U.S. President Barack Obama saying there’s still time for a diplomatic solution.
“The market is still quite worried about the euro zone,” Thina Saltvedt, Oslo-based analyst at Nordea Bank AB, said by phone today. “It is not only Greece but Spain too with the spreads there going wider. The market is driven by high uncertainty currently.”
Oil for July delivery, which expires tomorrow, fell as much as 99 cents to $82.28 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.97 at 10:37 a.m. London time, paring some of the losses earlier in the day. The more- actively traded August contract dropped 37 cents to $83.23 a barrel today. Front-month prices are 16 percent lower this year.
Brent oil for August settlement was at $95.32 a barrel, down 73 cents, on the London-based ICE Futures Europe exchange. It slipped $1.56 yesterday to $96.05. The front-month price for the European benchmark contract was at a premium to West Texas Intermediate of $12.06, compared with $12.45 yesterday.

Spain, Iran

The Spanish Treasury sold 2.4 billion euros ($3 billion) of 12-month bills at an average rate of 5.074 percent, 2.1 percentage points more than the 2.985 percent paid on May 14. It also sold 639.3 million euros of 18-month debt at 5.107 percent, compared with 3.302 percent last month, the Madrid-based Bank of Spain said today.
Brent has dropped 21 percent since April 14, when the first international talks with Iran on its nuclear program in 15 months were held in Istanbul. Chinese, French, German, Russian, British and U.S. delegates met with their Iranian counterparts yesterday for a third round of discussions over two days at a hotel near Russia’s Foreign Ministry.

‘Intense’ Talks

Obama said he and Russian President Vladimir Putin agreed at the Group of 20 summit in Mexico that “there’s still time and space” for a diplomatic resolution to tension over Iran’s “potential development” of nuclear weapons.
The five hours of meetings in Moscow were “constructive and serious,” Ali Bagheri, Iran’s deputy negotiator, told reporters. The talks were “very intense” and more substantive than those in Baghdad last month, according to Michael Mann, a foreign-policy spokesman for the European Union.
The so-called P5+1 group wants Iran to suspend production of uranium enriched to 20 percent, while the Islamic republic is pressing for relief from sanctions set to tighten when an EU oil embargo kicks in on July 1. European insurers and shipping companies carrying Iranian crude to other parts of the world will be affected and shouldn’t expect relief, Mann said in the Russian capital.
U.S. crude supplies probably dropped 1.3 million barrels last week, according to the median estimate of seven analysts in a Bloomberg News survey before a report from the Energy Department tomorrow. Gasoline and distillate stockpiles each rose 1 million barrels, the survey shows.

Federal Reserve

The American Petroleum Institute will release separate inventory data today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Federal Reserve officials begin a two-day meeting today to consider measures to stimulate the world’s biggest economy. The dollar slid against the euro amid prospects that policy makers will consider further stimulus to sustain the U.S. economy.
Enbridge Inc. (ENB) said it expects to boost capacity on its Seaway pipeline to 400,000 barrels a day by the end of this year. The line is already transporting its current capacity of 150,000 barrels a day from Cushing, Oklahoma, to the U.S. Gulf Coast, Enbridge President Al Monaco said yesterday in Toronto. Enterprise Products Partners LP (EPD), which owns the pipeline along with Enbridge, previously said the line’s capacity would be increased by the first quarter of 2013.
To contact the reporters on this story: Sherry Su in London at lsu23@bloomberg.net Rupert Rowling in London at rrowling@bloomberg.net
To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net