* Iran deal to take effect Jan. 20
* Obama urges Congress not to impose new sanctions on Iran
* North Sea Buzzard oilfield ramps up after problems
* Coming up: API oil inventory data at 4:30 p.m. Tuesday
(New throughout, updates prices and market activity to
settlement, adds details on gasoline)
By Jeanine Prezioso
NEW YORK, Jan 13 Oil fell on Monday after news
of a deal between Western nations and Iran to curb the OPEC
country's nuclear program and as production resumed from Libya
and a key North Sea oilfield.
Oil futures were also pressured by declines in gasoline
futures and equities, as last week's much weaker-than-expected
U.S. jobs data also weighed on hopes of economic recovery in the
world's largest oil consumer.
U.S. gasoline futures led the complex lower, losing more
than 1 percent, as a combination of factors spurred selling.
U.S. stock indexes had fallen 1 percent by late afternoon.
Traders flogged winter grade fuel, the market expected a
large build in inventories for the second week in a row and two
large refineries appeared to be restarting, all weighing on
prices, traders and brokers said.
Severe winter weather last week curbed demand for jet fuel
and gasoline, which also pressured prices, said Oliver Sloup,
director of managed futures with iitrader.com in Chicago.
"There were a lot of flight cancellations over the past week
or so, so that's going to be correlated with the build in
gasoline and a lot people were off the road, not driving, with
sub-zero temperatures," he said.
Brent crude for February delivery ended the session
50 cents lower at $106.75, after settling 86 cents higher on
Friday. U.S. crude slipped 92 cents to settle at $91.80
per barrel, after closing $1.06 higher in the previous session.
Brent prices were pressured by increased Libyan output and
the pending restart of the key Buzzard oilfield in the North
The sharper drop in the U.S. benchmark sent Brent's premium
to U.S. oil to more than $15 for a second time in six weeks. The
spread CL-LCO1=R ended the session at $14.95 after widening by
nearly $1 to $15.51 per barrel.
U.S. gasoline futures declined 1.3 percent to $2.6341
The gasoline-making unit at Irving Oil's St. John refinery
remained offline but saw increased activity after being shut
down on Friday, according to a report by industry intelligence
provider Genscape. Motiva Enterprises, the largest U.S.
refinery, restarted a boiler on the refinery's sole
gasoline-making unit over the weekend.
The U.S. added less than half the amount of jobs expected in
December prompting a U.S. central banker in a speech on Monday
to say "very accommodative" monetary policy remains appropriate
as the labor market has not yet healed. Traders
have been awaiting guidance from the U.S. Federal Reserve as to
how quickly it will pull back on its commodity-friendly
The market also factored in upcoming refinery turnarounds in
the U.S. Gulf Coast that may curb oil demand.
IRAN DEAL LOOMS
The deal between Iran and six major powers, intended to help
resolve a standoff over Tehran's nuclear ambitions, will come
into force on Jan. 20, the Iranian Foreign Ministry and the
European Union said on Sunday.
Some analysts and traders took this to mean that the 1
million barrels of Iranian oil, kept off the market by sanctions
over its nuclear program, would return soon, which drove down
prices. Some sanctions relief would start on the first day of
the six-month agreement's implementation on Jan. 20 and some
will be withheld until its final day, senior U.S. officials
U.S. President Barack Obama urged Congress not to impose
additional sanctions on Iran, while the ruler of Dubai said the
international community should ease sanctions on the Islamic
The West's deal with Iran could cause further rifts between
two Muslim sects and destabilize the region and threaten supply,
said Bill O'Grady, chief market strategist at Confluence
Investment Management in St. Louis. Iran is a Shi'ite republic
and Sunnis dominate Saudi Arabia.
"I do think that people in the market are beginning to
realize a nuclear deal in Iran doesn't ease tensions, in fact it
may raise them," he said. "That sentiment is starting to
steadily seep into the market and as it does it should have a
significant impact on the Brent/WTI spread."
Brent's losses were limited as buyers of Iraq's Basra Light
oil will see a reduction in February volumes.
(Additional reporting by Simon Falush in London and Jacob
Gronholt-Pedersen in Singapore; Editing by Dale Hudson, Meredith
Mazzilli, Bernadette Baum and David Gregorio)