* Oil rises as much as $1 after biggest one-week fall ever
* Talks between Iran and major powers were inconclusive
* Traders eye Tropical Storm Dolly, heading for Yucatan
By Fayen Wong
PERTH, July 21 (Reuters) - Oil rose towards $130 a barrel
on Monday after its biggest one-week slide on record as
inconclusive talks between Iran and world powers over Tehran's
disputed nuclear programme dimmed prospects of ending the row.
Prices were also lifted by worries about Tropical Storm
Dolly, the first storm of the 2008 Atlantic hurricane season
that could disrupt oil production in the Gulf of Mexico.
U.S. light crude for August delivery <CLc1> was up 91 cents
at $129.79 by 2355 GMT, after rising as much as $1.18 earlier,
a small bounce from last week's over $16 slump, the biggest
decline in dollar terms since futures began trading in New York
in 1983. In percentage terms it was the steepest sell-off since
late 2004.
London Brent crude <LCOc1> rose 1 cent to $130.20.
"The outcome of the Geneva meeting with Iran was quite a
disappointment and was the main factor in the lift in oil
prices this morning," said David Moore, a commodities analyst
at the Commonwealth Bank of Australia in Sydney.
"The markets had become quite hopeful on Friday that there
would be some sort of a resolution, but the meeting over the
weekend didn't result in any guarantees from Iran and that
raises the possibility of additional tensions."
Major powers gave Iran two weeks to answer calls to rein in
its nuclear programme on Saturday or face tougher sanctions
after talks ended in stalemate despite unprecedented U.S.
participation [].
Prospects of ending the row looked dim as Iran's top
nuclear negotiator Saeed Jalili said Iran would not discuss a
demand to freeze sensitive nuclear activities or face tougher
sanctions, though Iran's president described the talks as a
step forward on Sunday. []
A U.S. State Department spokesman said Washington hoped
Iran now understood that it had a choice between cooperation
and "confrontation, which can only lead to further isolation".
The recent war of words between Iran and the West over
Tehran's nuclear programme have heightened tensions in the
Middle East and helped push oil prices to a record high of
$147.27 earlier this month.
Worries that Tropical storm Dolly could hit the Gulf of
Mexico also boosted oil prices on Monday.
Tropical Storm Dolly headed for Mexico's Yucatan Peninsula
bearing heavy rains and winds, but the U.S. National Hurricane
Center in Miami said it posed no immediate threat to Gulf oil
installations slightly south of its projected path.
[]
Forecasters expect Dolly to emerge into the Gulf of Mexico
on Monday local time, north of the country's huge Cantarell oil
field and other ports and platforms used by the world's
sixth-largest oil producer and top supplier to the United
States.
Oil and natural gas companies said on Sunday they were
monitoring the progress of Tropical Storm Dolly and no
production was shut nor were workers being flown off platforms
in the Gulf.
Despite oil's rebound on Monday, analysts said worries of
the health of the U.S. economy due to the housing crisis would
continue to weigh on oil prices, which have shed over $17, or
13 percent, from its peak struck on July 11.
(Reporting by Fayen Wong, Editing by Jacqueline Wong)
