* Iranian President ready for "substantive" nuclear talks
* EPA announces it may change biofuel policy in 2014
* RIN sell-off drags gasoline, crude down
* API says U.S. crude stockpiles down by 3.66 million
(Updates with API crude stocks report)
By Nicolas Medina Mora Perez
NEW YORK, Aug 6 Oil fell around $1 a barrel on
Tuesday as Iran's new president signalled willingness to
negotiate with the West over Tehran's disputed nuclear program
and as U.S. gasoline prices slid after a sell-off in ethanol
Iran's newly elected President Hassan Rouhani said he was
ready to enter "serious and substantive" negotiations, reducing
the geopolitical risk premium for oil prices.
A spokeswoman for the U.S. State Department said Rouhani's
inauguration presented "an opportunity," but that the United
States wants to see Iran take "credible steps" toward the
solution of the conflict.
The price of U.S. gasoline fell 1.25 percent, dragged
down by a sell-off in the ethanol credits U.S. refiners must
purchase to comply with environmental regulations.
The cost of the credits, also known as Renewable
Identification Numbers (RINs), slid almost 20 percent as the
Environmental Protection Agency announced it would use its
authority to lower its volume goal for biofuel use in 2014.
RINs fell as low as 80 cents, after having reached prices of
more than $1 on Monday and of $1.50 two weeks ago.
"The RINs issue sent oil products lower, and they were
already weak because of returning refinery units," said Phil
Flynn, an analyst with Price Futures Group in Chicago.
"Even ethanol producers are open to the EPA issuing some
sort of waiver to avoid having congress revamp the whole
U.S. oil fell $1.26 to settle at $105.30 per barrel.
It hit a session low of $104.86 a barrel.
Brent crude dropped 52 cents to settle at $108.18 per
barrel, having fallen to a low of $107.46.
The North Sea benchmark's premium to its U.S. counterpart
settled at $2.88 per barrel, swinging as wide as $2.94 and as
narrow as $1.82 during the session.
Gasoline futures tumbled 3.6 cents to trade around
$2.91 a gallon, having reached lows of $2.88.
Prices were further pressured by news that oil exports from
the Buzzard field in the North Sea, which form part of the
underlying market for Brent futures, are set to resume on
Tuesday, easing concerns about short-term supply
The U.S. Energy Information Administration also said that
the United States will be producing more crude oil than it
imports by October, as output jumps to the highest level since
DOVE TURNS HAWKISH
Signs that the U.S. Federal Reserve will probably reduce its
bond-buying stimulus package later this year also had a negative
impact on oil prices.
Chicago Fed President Charles Evans, who had been among the
strongest proponents of fiscal stimulus policies, said the U.S.
central bank is "quite likely to reduce the flow of purchases
rate starting later this year."
"Their comments seem to suggest that they are going to cut
spending in September, and that hurts risk assets like oil,"
said Bob Yawger, director of energy futures for Mizuho
Securities USA Inc in New York.
The prices of oil and other commodities have been supported
by the Fed's bond-buying program, designed to boost the economy.
API CRUDE INVENTORIES REPORT
The American Petroleum Institute, an industry group, said on
Tuesday that U.S. crude oil stocks fell by 3.66 million barrels
in the week leading to Aug. 2, a steeper fall than expected.
Earlier in the day, a Reuters poll of oil analysts had forecast
a drop of 1.2 million barrels.
The API also said that crude stocks at Cushing, Oklahoma,
the delivery point for U.S. oil futures contracts, fell by 2.2
million barrels over the same period.
The U.S. Energy Information Administration, a government
body that tracks crude and refined products stockpiles, will
release its own numbers on Wednesday at 10:30 a.m. EDT.
(Additional reporting by David Sheppard and Robert Gibbons in
New York, Peg Mackey in London, and Manash Goswami in Singapore;
Editing by Sofina Mirza-Reid, David Gregorio and Gunna Dickson)