VINACHEM

Oil fell for a second day in NewYork after Iran reiterated an offer to suspend domesticproduction of medium-enriched uranium before European officialsmeet to discuss tighter sanctions on the Persian Gulf country.

Futures slid as much as 1.1 percent to the lowest level inalmost a week. Iran is ready to enter talks about its nuclearprogram in exchange for guaranteed supplies of 20 percent-enriched uranium for its Tehran Research Reactor, said Ramin Mehmanparast, a Foreign Ministry spokesman, according to a PressTV report yesterday. The European Union has reached apreliminary agreement to intensify sanctions to increasepressure on OPEC’s third-largest oil exporter to curb itsnuclear program, EU diplomats with knowledge of the matter said.

“If the news coming out from Iran indicating that it’swilling to suspend 20 percent enrichment for reactor fuel istrue and they reach an agreement, then we might see a push tothe downside” for oil, Nabil Farhat, a partner at Al FajerSecurities, an Abu Dhabi-based broker, said yesterday.

Crude for November delivery fell as much as $1.04 to $90.82a barrel in electronic trading on the New York Mercantile Exchange and was at $91.11 at 12:18 p.m. Singapore time. Thecontract declined 0.2 percent on Oct. 12 to $91.86. Prices aredown 7.8 percent this year.

Brent oil for November settlement on the London-based ICEFutures Europe exchange lost as much as 77 cents, or 0.7percent, to $113.85 a barrel. The contract expires tomorrow. Themore actively traded December future was down 56 cents at$113.05. The European benchmark was at a $22.94 premium to NewYork-traded West Texas Intermediate grade, up from $22.76 onOct. 12.

Iran Sanctions

Officials from the EU’s 27 nations agreed in Brussels onOct. 12 to close loopholes in sanctions aimed at curbing theIranian government’s ability to raise funds for its atomicprogram, which the U.S. and its allies say may be aimed atproducing weapons, the officials said, asking not to beidentified because the talks were private.

The proposed sanctions must now be approved by the bloc’sforeign ministers, who meet today in Luxembourg. The agreementfollows international talks in recent months that have yieldedlittle progress. Iran denies that it’s developing nuclearweapons and says its program serves civilian needs.

Oil exports from Iran will probably remain at lower-than-normal levels for the next few years because of the sanctions, Antoine Halff, the head of the International Energy Agency’s oilindustry and markets division, said on a conference call withreporters on Oct. 12. The country’s crude exports decreased to860,000 barrels a day in September, from 1.1 million a day inAugust, data from the Paris-based agency showed.

Oil Demand

Shipments have been “stable” in recent months, saidMohammad Ali Khatibi, Iran’s governor to the Organization ofPetroleum Exporting Countries, according to the Tehran-basedDonya-e-Eqtesad newspaper yesterday. He denied that overseassales dropped last month.

The IEA also reduced its forecast for global oilconsumption in its monthly report on Oct. 12, citing slowereconomic growth. The agency predicted world oil use of 89.7million barrels a day this year and 90.5 million in 2013, downby 100,000 barrels a day each from the August outlook.

“The report that Iran may be prepared to suspend theiruranium plans may be a bit of a background factor but we’reprobably some time away from things coming to a head” in the Middle East, said Ric Spooner, a chief market analyst at CMCMarkets in Sydney. “The main game is the demand-supply balance.The risk to oil prices is to the downside.”

China Purchases

Crude imports by China, the world’s second-biggest oilconsumer, slid 1.8 percent in September from a year earlier to20.08 million metric tons, according to data from the Beijing-based General Administration of Customs on Oct. 13. Purchaseswere up 9.1 percent from August, its website showed.

Money managers cut net-long positions in West TexasIntermediate oil by 5,168 futures and options combined, or 3.1percent, to 161,004 in the week ended Oct. 9, according to theU.S. Commodity Futures Trading Commission’s Commitments ofTraders report on Oct. 12.

Oil in New York has long-term technical support at $89.83 abarrel, data compiled by Bloomberg showed. On the weekly chart,that’s the 50 percent Fibonacci retracement of the decline to$32.40 in December 2008 from an intraday record high of $147.27in July that year. Buy orders tend to be clustered near chart-support levels.