By Eric Yep
Crude-oil futures remained under pressure in Asian trade
Tuesday, as investors monitor the progress of the Iranian nuclear
talks in Vienna and a worsening Greek debt crisis.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in August traded at $57.97 a barrel at 0258 GMT, down
$0.36 in the Globex electronic session. August Brent crude on
London's ICE Futures exchange fell $0.29 to $61.72 a barrel. Oil
prices had lost around 2% in the previous trading session.
Greece looks set to default on its payment to the International
Monetary Fund due Tuesday. Markets are also increasingly worried
about the likelihood of Greece exiting the eurozone.
Meanwhile, Iran has dispatched two senior officials to the
nuclear talks in Vienna in a last-minute push for a breakthrough,
even as U.S. officials acknowledged the talks are likely to
overshoot today's deadline.
There is significant concern in the oil market that Iran's
output will increase quickly should an agreement be reached, with
analysts forecasting a sharp increase in oil production by the end
of 2015, eventually topping 4 million barrels a day.
"We believe the potential increase in Iran's output following
any deal is likely to be far more limited than consensus expects,"
said Paul Horsnell, head of commodities research at Standard
Chartered.
He said Iran hasn't produced 4 million barrels a day since
August 2005, citing data from the U.S. Energy Information
Administration (EIA), adding that the capabilities of Tehran's
domestic oil industry have eroded due to Western sanctions in
recent years.
"We estimate that Iran's sustainable capacity is now no higher
than 3.2 million barrels a day, and we believe it will be a
relatively long process to tackle the decline of output from the
existing aging fields," Mr. Horsnell said.
Additionally, traders in Singapore said a large portion of
Iranian oil in floating storage are condensates, a lighter form of
crude oil used as feedstock in the petrochemical industry.
The American Petroleum Institute will publish its oil inventory
report later Tuesday, followed by the U.S. EIA on Wednesday. Market
estimates are for U.S. commercial crude stocks to fall by another 2
to 3 million barrels.
Nymex reformulated gasoline blendstock for July--the benchmark
gasoline contract--fell 30 points to $2.0273 a gallon, while July
diesel traded at $1.8390, 24 points higher.
ICE gasoil for July changed hands at $564.00 a metric ton, down
$0.50 from Monday's settlement.
Write to Eric Yep at eric.yep@wsj.com
Laurence Norman and Jay Solomon contributed to this report