By Peg Mackey- April 26
LONDON (Reuters) – London Brent crude oil fell below $68 a barrel on Thursday after Iran’s chief nuclear negotiator Ali Larijani said differences with the European Union over its nuclear program were gradually narrowing.
Prices had rallied by more than a dollar on Wednesday in response to a much bigger than expected decline in U.S. gasoline stocks, which sank them to the lowest level since October 2005.
London Brent crude, currently seen as more representative of global oil prices than U.S. crude, shed 76 cents to $67.81 a barrel at 1352 GMT, after gaining $1.41 on Wednesday. U.S. crude <CLc1> fell 62 cents to $65.23.
"The market has been so focused on gasoline that it has forgotten a bit about Iran," said Olivier Jakob of Petromatrix. "But now there seems to be some softening in the approach."
After talks on Wednesday between the European Union and the world’s fourth biggest oil exporter Iran, Larijani said the two sides — due to meet again in two weeks — were approaching "a united view" in some areas.
The dispute over Iran’s nuclear programme, which Tehran insists is only for energy, has dragged on for nearly a year, keeping oil prices supported as investors anticipate possible supply disruptions.
World powers are reluctant to see Iran develop an energy form that can enable production of an atom bomb, with opposition strongest from the United States.
Brent crude has traded in a $5 a barrel range of around $65-to-$70 for about a month.
"Crude oil prices have consolidated in the mid-$60s and there is no fundamental reason to push them down — especially if demand growth remains healthy in the U.S. and China," said Mike Wittner of Calyon investment bank.
Prices have also drawn support from a flare-up in violence in OPEC-producer Nigeria following weekend elections that observers say were rigged.
Nigeria has lost 600,000 barrels per day of output for over a year, though Nigerian officials say more than half that volume will be restarted by the end of May.
But analysts said a push beyond $70 was unlikely because of rising crude inventories in top consumer the United States.
The latest U.S. data on Wednesday showed overall crude inventories gained 2.1 million barrels, helping to keep the pressure on U.S. light crude.
Gasoline stocks fell by 2.8 million barrels, bringing the cumulative decline over the past 11 weeks to 33 million barrels.
"The culprit as ever is an overly stressed refining system lacking flexibility and finding as a result that units now have a greater than normal tendency to fall over," said Kevin Norrish of Barclays Capital.
