Oil rises on China call for growth, Iran

NEW YORK (Reuters) - Oil prices rose on Monday after China's premier called for more efforts to stimulate growth and as investors cautiously awaited results of Iran's second round of revived talks with major powers over Tehran's nuclear program.

Chinese Premier Wen Jiabao's call for "giving more priority to maintaining growth" signaled Beijing's willingness to take action after several recent economic indicators suggested that the economy could continue to slow in the second quarter.

"China's central bank has already cut bank reserve requirements to stimulate growth and such comments suggest that even more may be done in the months ahead to ward off a hard landing," Addison Armstrong, a senior director at Tradition Energy, said in a note.

Group of Eight leaders backed keeping Greece in the euro zone at their summit on Saturday, but a lack of specific prescription for resolving the widening debt crisis left investors cautious.

G8 leaders did raise pressure on Iran by signaling a readiness to tap strategic oil stockpiles quickly this summer if tougher new sanctions on Tehran strain supplies.

The U.N.'s International Atomic Energy Agency (IAEA) chief held extensive and useful talks in Iran on Monday and expects them to have a positive impact on a six-power meeting later this week, Iranian media said.

But there was no sign of a breakthrough deal and there was no immediate comment from the IAEA.

Brent July crude rose $1.63 to $108.77 a barrel by 2:20 p.m. EDT (1820 GMT), having reached $108.83 and following Brent's 10.59 percent slide in the preceding three weeks.

After six straight lower settlements, U.S. June crude was up 92 cents at $92.40. The June contract expires on Tuesday, with U.S. crude also trying to break a string of three weekly losses.

Total crude trading volumes were lackluster. Brent volume was 39 percent below its 30-day average, with U.S. turnover 46 percent below its 30-day average.

Brent's premium to U.S. crude increased and hovered near $16 a barrel after Saturday's start of the Seaway crude pipeline reversal.

The Seaway pipeline began pumping crude from Cushing, Oklahoma, to the U.S. Gulf Coast, with throughput expected to increase within days to 150,000 barrels per day. The reversal is intended to ease a glut of crude in the U.S. Midwest and is expected to reduce Brent's premium to U.S. crude.

U.S. crude oil stocks were expected to have increased last week, a ninth straight rise, according to a Reuters survey of analysts on Monday. Fuel stocks were seen unchanged.

The oil futures complex also received support from a stronger U.S. equities, following their worst weekly decline in 2012 and after Friday's much anticipated Facebook initial public offering. <.n/>

The euro turned positive against the U.S. dollar, lifted by gains in European and U.S. equities. The dollar index <.doxy> weakened. A weaker U.S. currency can be supportive to dollar-denominated commodities by making them less expensive for customers using other currencies.

THE IRANIAN WILD CARD

IAEA chief Yukiya Amano met the head of Iran's nuclear energy agency, Fereydoun Abbasi-Davani, and its top nuclear negotiator, Saeed Jalili, who will meet in Baghdad on Wednesday with the five permanent members of the U.N. Security Council and Germany to discuss Iran's disputed nuclear activity.

Oil traders and analysts remain skeptical about whether negotiations will succeed as a European Union ban on Iranian oil set for July approaches, but concerns about a conflict in the region and disrupted oil supply were eased by April's restart of talks between Iran and the West.

"All signs point to progress. Not everything is going to be solved by these meetings but at least there is some progress," said Olivier Jakob of consultancy Petromatrix.

Increased production from Saudi Arabia, Iraq and Libya have helped push U.S. inventories to a 21-year peak and allowed Iran's customers to seek alternative barrels in the face of tightening sanctions on Tehran.

China's crude oil imports from Iran rebounded more than 50 percent in April from March after resolving pricing disputes over term contracts, but shipments fell nearly a quarter from a year ago, with Saudi Arabian supplies helping to plug the gap.

(Additional reporting by Gene Ramos in New York, Jessica Donati in London and Florence Tan in Singapore; Editing by Bob Burgdorfer)

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