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Brent edges down towards $106; Iran deal in focus

Jacob Gronholt-Pedersen
Monday, 11 Nov 2013 | 10:47 PM ET

* U.S. Secretary Kerry says hopeful of Iran deal within months

* Chinese leaders to announce 10-year reform agenda

* Stronger dollar weighs on prices

* U.S. oil inventory data delayed by a day

SINGAPORE, Nov 12 (Reuters) - Brent crude futures dropped towards $106 per barrel on Tuesday, as investors eyed the next round of talks on Iran's nuclear programme and possible economic reforms to be announced by Chinese leaders later in the day.

Following unsuccessful talks between Iran and world powers at the weekend, U.S. Secretary of State John Kerry said he hoped an agreement would be signed within months, while London and Tehran revived diplomatic ties.

The failure to reach a deal pulled Brent away from a four-month low hit last week to settle above $106 per barrel on Monday. At 0340 GMT, Brent for December delivery was 22 cents lower at $106.18 per barrel. U.S. crude was down 27 cents at $94.87 per barrel.

"At least for now, the idea that Iranian oil will return to global market is off the table," said Chee Tat Tan, investment analyst at Phillip Futures in Singapore.

In a sign it is willing to grant concessions, Iran said on Monday it will grant U.N. inspectors "managed access" to a uranium mine and a heavy-water plant. But concern is growing among U.S. lawmakers and a pro-Israel group that Washington may be giving away too much in negotiations with Tehran.

"We still see big challenges in reaching a deal. The United States is under political pressure, and Iran doesn't seem to be giving too much," Tan said.

Talks between Iran and Western powers will resume on Nov. 20.

CHINA REFORM

Investors are also awaiting the unveiling of China's economic blueprint for the next decade later on Tuesday as Beijing seeks to balance the need to overhaul the world's second-largest economy while it tries to preserve stability and to reinforce the Communist Party's power.

Economic reforms are likely to dominate when the country's leaders announce a 10-year agenda at the end of a Communist Party meeting on Tuesday, but some analysts say the chances of any big surprises will be small.

While not likely to have a direct impact on oil prices, the announcement will show how committed China's new leadership is to reform of the world's second largest oil consumer after formally taking power in March.

A strengthening U.S. dollar weighed on oil prices, as it held to the upward trend seen at the end of last week on expectations the Federal Reserve might scale back its stimulus sooner than thought following a strong U.S. jobs report.

Some support came from continued trouble getting oil flowing out of Kazakhstan's giant Kashagan oilfield. Oil is unlikely to come online until spring as the world's biggest crude discovery in half a century faces equipment challenges including leaky pipes, industry sources said.

Key U.S. oil inventory data reports this week will be delayed a day by the Veterans Day holiday on Monday.

Industry group the American Petroleum Institute will release its report on Wednesday and the U.S. Energy Information Administration will publish its data on Thursday.

U.S. crude oil stockpiles were seen rising by 1.6 million barrels last week, according to a preliminary poll of Reuters analysts, while distillates and gasoline inventories were expected to have declined.

(Editing by Tom Hogue)