Oil extended its slide from a three-month low as investors eschewed risky assets amid speculation China’s efforts to stem an equity rout are failing.
Futures fell as much as 0.9 percent in New York for a fifth day of declines, the longest losing streak since May. The Shanghai Composite Index plunged as traders unwind margin bets at a record pace amid a slump that’s wiped more than $3.5 trillion of value. Diplomats in Vienna extended a deadline for a nuclear deal with Iran until July 10.
Oil has given up this year’s gains as investors avoided risky assets amid concern over economic stability in Asia and Europe. Iran, the fourth-largest producer in the Organization of Petroleum Exporting Countries, plans to boost crude exports and recapture market share when sanctions are lifted.
“Prices are getting hit from all angles, we see very little optimism in the oil-futures market,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said by phone. “It will persist for at least the next two weeks until we see a visible return of confidence in China’s financial markets.”
West Texas Intermediate for August delivery decreased as much as 46 cents to $51.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $52 at 12:42 p.m. Singapore time. The contract dropped 20 cents to $52.33 on Tuesday, the lowest close since April 13. Total volume was about 2 percent above the 100-day average. Prices are down 2.4 percent this year.
Chinese Market
Brent for August settlement slid as much as 47 cents, or 0.8 percent, to $56.38 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $4.51 to WTI.
China’s government has attempted in recent weeks to stabilize the market with measures including raising margin requirements for sell orders and stock purchases by state- directed funds and interest-rate cuts. The country is the world’s biggest oil consumer after the U.S.
Investors are moving to assets that offer some safety as China’s stock rout and Greece’s possible exit from the euro roil global markets. The yen climbed 0.5 percent versus the dollar as Treasuries rallied with Japanese bonds.
In Vienna, world powers and Iran say they’re closer than ever to an accord after 11 days of high-level talks. An agreement would speed the Persian Gulf nation’s return to world oil markets and the international financial system.
“An Iran deal will add more pressure to the supply side at a time when demand is looking a bit uncertain,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “It would not be good for the oil price.”
Iranian Supply
Iran’s plan to sell more crude remains a long way off, Goldman Sachs Group Inc., Bank of America Corp. and Societe Generale SA said last week. Its goal of boosting exports by 50 percent would require an extra 500,000 barrels a day of production, which the banks predict will take six to 12 months as the nation revives aging oil wells.
U.S. crude inventories were probably unchanged last week after rising to 465.4 million barrels, based on the median forecast in a Bloomberg survey of nine analysts before an Energy Information Administration report Wednesday. Supplies fell by 958,000 barrels, the industry-funded American Petroleum Institute reported Tuesday, according to ForexLive.
European leaders set a Sunday deadline for Greece to accept a debt rescue, saying otherwise they’ll take the unprecedented step of propelling the country out of the euro. At a Brussels summit, Greece’s anti-austerity government was ordered to make new economic reform proposals that could earn it another aid package and head off financial ruin.
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