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UPDATE 7-Oil slumps on prospect of increasing Iranian exports

Published 16/07/2015, 05:27 am
© Reuters.  UPDATE 7-Oil slumps on prospect of increasing Iranian exports

* Iranian sanctions likely to be lifted from early 2016

* Iran exports to rise 200,000-400,000 bpd in 2016-Goldman

* U.S. crude oil stocks drop last week, Cushing stocks up - EIA (Updates prices to settlement)

By Robert Gibbons

NEW YORK, July 15 (Reuters) - Oil prices fell about 3 percent on Wednesday on expectations increased exports from Iran will add to a global supply glut and on rising inventories at the delivery hub at Cushing, Oklahoma.

Tuesday's agreement on Tehran's nuclear program between six world powers and Iran is expected to result in the lifting of sanctions, which have limited sales of Iranian oil for several years, in early 2016. ID:nL6N0WI2UM

Brent August crude LCOc1 fell $1.46, or 2.5 percent, to settle at $57.05 a barrel. The August contract expires on Thursday.

U.S. August crude CLc1 slumped $1.63, or 3 percent, to settle at $51.41.

Oil prices slumped even though U.S. crude inventories fell 4.3 million barrels last week, according to the Energy Information Administration (EIA), as refiners boosted throughput to a record level. EIA/S

While the inventory slide was more than analysts' expectations for a decrease of 1.2 million barrels, the drop was less than the 7.3 million-barrel decline reported on Tuesday by the industry group American Petroleum Institute (API). API/S

Crude stocks increased at the Cushing, Oklahoma, delivery hub for the U.S. crude contract.

"Cushing stocks were up and that should provide some pressure for U.S. crude," said Tariq Zahir, analyst at Tyche Capital Advisors in Laurel Hollow, New York.

Rising gasoline and distillate inventories also weighed on U.S. RBOB gasoline RBc1 and ultra-low sulfur diesel (ULSD) HOc1 futures.

RBOB fell 7.18 cents to settle at $1.8589 a gallon, dropping below RBOB's 200-day moving average for the first time since late May, according to Reuters data.

Analysts at Goldman Sachs estimate Iran could supply an extra 200,000-400,000 barrels per day (bpd) of crude in 2016 on top of a release of 20-40 million barrels from floating storage.

Iran's oil production could increase by 500,000-600,000 bpd and could reach its pre-sanctions level of 4 million bpd within six to 12 months if there is enough demand, Roknoldin Javadi, National Iranian Oil Company (NIOC) managing director told Iran's Shargh newspaper. ID:nL5N0ZV246

Most analysts agree that first Iranian oil exports could enter the global market in early 2016, but estimated additional volumes vary between 300,000 and 700,000 bpd.

Traders are also watching China, which has seen slowing growth. China on Wednesday reported second-quarter growth at an annual rate of 7 percent, steady to the previous quarter. ID:nL4N0ZU2IF

French bank Natixis said there was a risk of oil prices falling further if China's economy slows while global oil production stays close to record highs.

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GRAPHIC-Iran nuclear & oil industry:

http://graphics.thomsonreuters.com/15/irannuclear/index.html

GRAPHIC-World petroleum oversupply:

http://link.reuters.com/jaz84w

GRAPHIC-China GDP: http://link.reuters.com/duq25w

GRAPHIC-China car sales: http://link.reuters.com/xak25w

FACTBOX-Oil price forecasts: ID:nL2N0ZV00W

A Brief History of the Oil Crash: ID:nL6N0VG30C ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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