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By Bloomberg

Oil declined after the biggest advance in three weeks as OPEC crude supply rose amid concern that Greece’s failure to make an IMF payment would worsen its economic crisis.

Futures slid as much as 1.7 percent in London, extending a second monthly loss in June. Production from the Organization of Petroleum Exporting Countries accelerated last month to the highest level since August 2012 as Iraq pumped at a record, according to a Bloomberg survey. U.S. crude inventories expanded by 1.9 million barrels last week, the industry-funded American Petroleum Institute was said to have reported Tuesday.

Oil’s recovery from a six-year low in January has stuttered amid speculation the price rally is spurring production and prolonging a surplus. Iraq is joining Saudi Arabia in boosting output as OPEC members defend market share against higher-cost producers. Investors have avoided assets perceived to be risky amid Greece’s debt crisis.

“The OPEC production survey shows the market is still heavily, heavily oversupplied,” Andy Sommer, an analyst at Axpo Trading AG in Dietikon, Switzerland, said by phone. “That’s the main topic capping the upside to the market.”

Brent for August settlement declined as much as $1.11 to $62.48 a barrel on the London-based ICE Futures Europe exchange and was at $63.04 at 1:16 p.m. London time. The contract climbed 2.6 percent on Tuesday, the most since June 9. The European benchmark crude traded at a premium of $4.34 to West Texas Intermediate, the U.S. marker.

Leap Second

WTI for August delivery dropped as much as $1.20, or 2 percent, to $58.27 a barrel in electronic trading on the New York Mercantile Exchange. It fell 1.4 percent in June, paring the first quarterly gain in a year. Total volume was about 37 percent below the 100-day average for the time of day.

Electronic trading was delayed because of the leap second, CME Group Inc. said. Pre-market trading started at 8:30 p.m. New York time on June 30, with normal trading beginning 15 minutes later for July 1 transactions.

Greece missed a deadline for repaying $1.7 billion to the International Monetary Fund after last-ditch overtures to creditors were rebuffed Tuesday. Prime Minister Alexis Tsipras offered to accept austerity proposals to end the standoff, subject to certain conditions, according to a letter to creditors obtained by Bloomberg. German Chancellor Angela Merkel refused to engage until after Greece’s July 5 referendum on budget cuts demanded by creditors.

Iraq Climbs

OPEC, whose 12 members supply about 40 percent of the world’s oil, pumped 32.1 million barrels a day in June, an increase of 744,000 a day from May, according to the Bloomberg survey of companies, producers and analysts. Iraqi output surged by 567,000 barrels a day to a record 4.39 million.

In Vienna, momentum built toward a historic nuclear deal as negotiators from Iran and six world powers gave themselves until July 7 to draft the text of a final accord after missing a June 30 deadline.

The Persian Gulf nation remains a long way off from selling more crude, according to Goldman Sachs Group Inc., Bank of America Corp. and Societe Generale SA. Its goal of boosting exports by 50 percent would require an extra 500,000 barrels a day of production, which the banks predicted will take six to 12 months as Iran revives aging oil wells.

Crude stockpiles in the U.S., the world’s largest oil consumer, shrank by 2.5 million barrels in the week ended June 26, based on the median forecast in a separate Bloomberg survey of 11 analysts before an Energy Information Administration report Wednesday. While supplies decreased the previous eight weeks to 463 million barrels, they’re still 84 million above the five-year average level for this time of the year.

“Cuts in the U.S. have the potential to be offset by increases from OPEC, particularly if we see more oil from Iran,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It’s not very good news for prices.”