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Last Updated: Wednesday, 23 August 2006, 20:50 GMT 21:50 UK
Oil falls after Iran talks offer
Traders on the New York Mercantile Exchange
Traders have been concerned over the situation in Iran
Oil prices have dipped following signs that Iran is prepared to advance talks on its nuclear programme.

Tehran has said it is prepared for "serious negotiations" regarding the programme, after the UN called for Iran to stop enriching uranium.

US light sweet crude settled down $1.34 at $71.76 per barrel, while Brent crude dipped $1.22 to $72.02.

Figures showing US crude stockpiles remaining 5% higher than last year also exerted downward pressure on prices.

Gas stocks rise

Inventories fell by 600,000 barrels last week, according to a Department of Energy update, but supplies remain historically high.

Gasoline stocks, meanwhile, rose by 400,000 barrels.

Traders remain worried that the tension over Iran's nuclear programme could disrupt oil supplies.

The UN passed a resolution in July demanding that Iran stop enriching uranium by 31 August, or face sanctions.

While the official response indicated a willingness to talk, not everyone has been so optimistic that the disagreement is nearing an end.

Some analysts have said Iran will continue to enrich uranium, thereby effectively rejecting the UN's demands.

In response "traders are locking in profits," said Koichi Murakami with brokerage firm Daiichi Shohin.

While oil prices fell in the news from Iran, traders will be keeping a close eye on US oil inventory figures which are due out later on Wednesday, with some predicting that oil stocks will be down.

The market is also monitoring the path of tropical storm Debby - the fourth of the US 2006 hurricane season - although it is not expected to threaten oil and gas equipment.

Last year, hurricanes in the Gulf of Mexico caused massive damage and pushed oil prices to then record highs.

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