Oil steadies around $113 as Iraq supply worries ease
London, June 27, 2014
Brent crude oil steadied around $113 a barrel on Friday, consolidating after one of its biggest weekly falls this year as investors unwound positions on reduced concerns over exports from strife-torn Iraq.
Prices have dropped nearly $3 from a nine-month high of $115.71 hit on June 19 as output from Iraq's southern oilfields - which produce most of the nation's 3.3 million barrels per day (bpd) - remained unaffected by fighting in the north and west.
"The exaggerated fear premium is being priced out," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
Brent was down 10 cents at $113.11 a barrel by 0750 GMT after falling 79 cents in the previous session. It has lost around 1.5 percent so far for the week, the second heaviest weekly sell-off this year.
U.S. crude was down 10 cents at $105.74 after ending 66 cents down at $105.84, the lowest settlement since June 11. For the week, the contract has fallen 1.4 percent.
If fighting between Sunni militants and Iraq government forces is kept north of Baghdad then the chances of supply disruptions will ease, risk analysts said.
Investors are still watching how the fight for control of Iraq's largest refinery, the 300,000-barrel-per-day (bpd) Baiji complex, unfolds.
Also weighing on oil was news Libya's oil output has risen to 300,000 bpd after the El Feel oilfield in the southwest increased production.
A spokesman for Libya's National Oil Corp (NOC) said El Feel was pumping 105,000 bpd after resuming operations after the end of a protest earlier this month.
Libya's eastern Hariga oil port has also reopened and is preparing to receive a tanker after a deal was reached with a group of protesting security guards, NOC said.
"Libya's output seems to be recovering slowly," said Commerzbank's Fritsch.
Ric Spooner, chief markets analyst at CMC Markets said that, although Iraq's oil production and exports remained at risk from the Sunni Islamist insurgency across the north of the country, investors were worrying less.
"The risks can't be dismissed, but the fact time has gone by suggests investors are getting nervous about the risk premium."
Weaker-than-expected U.S. data was also negative for oil.
U.S. consumer spending rose less than expected in May, prompting economists to downgrade estimates for second-quarter growth, muddying the outlook for demand from the world's top consumer of oil. – Reuters