Oil tops $110 over Iraq supply fears
London, June 11, 2014
Oil futures rose above $110 a barrel on Wednesday as violence in Iraq prompted worries about the supply outlook, while a fall in US stockpiles of gasoline pointed to stronger seasonal demand.
Brent futures gained 50 cents to $110.02 a barrel by 1136 GMT, after shedding 0.4 per cent in the previous session.
US oil rose 17 cents to $104.52 a barrel. It hit an intraday high of $105.06 in the previous session, inching close to the peak for the year at $105.22, touched in early March.
Militants from an al Qaeda splinter group who seized Iraq's second-biggest city of Mosul this week have advanced into the oil refinery town of Baiji, setting the court house and police station on fire, security sources said.
The United States said it would support a strong, coordinated response to the aggression.
Iraq's Oil Minister Abdul Kareem Luaibi said key southern oilfield export facilities were "very, very safe", with shipments running at around 2.6 million barrels per day (bpd).
Although the fighting is not close to oil-producing areas, it has prompted fears that the situation could deteriorate further and ultimately hit production.
"It warrants support of the oil price. We already have Libya out, Iran's exports are low, and there is no prospect of an immediate return for either of them," said Bjarne Schieldrop, analyst at SEB in Oslo.
Libya is aiming for an oil output target of 800,000-900,000 bpd if its output is restored soon, the country's Oil Minister Omar Shakmak said.
Ports in Libya remain shut as protests have lowered oil exports, which were over 1 million bpd, close to zero.
Data from the industry group American Petroleum Institute showed US gasoline stocks fell by 441,000 barrels last week, compared with analysts' expectations in a Reuters poll for an 843,000-barrel gain.
Investors are waiting for data from the U.S. government's Energy Information Administration due at 1430 GMT, which is expected to show that US commercial crude oil inventories fell.
Opec, which pumps more than a third of the world's oil, has agreed to renew for the second half of 2014 its oil production ceiling of 30 million barrels a day, Nigeria Oil Minister Diezani Alison-Madueke said at the end of its meeting on Wednesday.
Oil market supply and demand are in good order, Saudi Oil Minister Ali al-Naimi said immediately before the meeting.
"Supply is good, demand is good, the price is good," Naimi told reporters. "$100, $110, $95 is a good price."
Olivier Jakob at Petromatrix in Zug, Switzerland said Naimi's comments could act as a brake on further strength for oil.
"Brent has not been able to significantly break from the resistance of $110 this year. The Saudi statement should reinforce the resistance of Brent above $110.00." - Reuters