Friday 22 June 2018

Brent at nine-month high on Iraq tensions

London, June 23, 2014

Brent crude rose towards a nine-month high above $115 a barrel on Monday amid concerns of possible disruptions to supply from Iraq where Sunni insurgents seized control of more towns over the weekend.

Data from top energy consumer China showing an expansion in the country's factory sector for the first time in six months also underpinned oil prices.

Brent rose 62 cents to $115.43 by 0635 GMT, just shy of $115.71 hit on Thursday, the highest since Sept. 9.

US crude for August delivery gained 50 cents to $107.33. The July contract expired on Friday.

"Sunni insurgents appear to control more towns which is helping to keep the oil markets where they are. The oil markets have a pretty significant risk premium built-in already. Prices are likely to hold these levels," said Ric Spooner, chief market analyst at Sydney's CMC Markets.

Brent is likely to be close to $114.50 a barrel next Friday, Spooner forecast. He expects U.S. crude to climb to about $108 per barrel this week.

Militants from the Islamic State of Iraq and the Levant seized three towns in Iraq's western Anbar province after taking control of two frontier crossings on the Iraq-Syrian border. Traffic on the main highway from Jordan to Baghdad was also halted after militants took control of Rutba on Sunday.

But there was a lull in fighting at Iraq's largest refinery, the 300,000 barrel-per-day Baiji complex, on Sunday although militants surrounded the compound.

"There is a lot of concern how the situation (in Iraq) will go on," said Ken Hasegawa, commodity sales manager at Tokyo's Newedge Japan. "Selling pressure is limited," he said.

U.S. Secretary of State John Kerry is expected to discuss possible Iraq oil supply disruptions with Gulf countries during a visit to the region this week, a senior State Department official said on Sunday.

Oil prices also drew support from China's factory data that showed new orders surged, according to a preliminary HSBC survey, indicating the economy is stabilising thanks to Beijing's measures to shore up growth.

The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index (PMI) rose to 50.8 in June, the first time since December PMI was in growth territory.

The oil market is also keeping an eye on Libya's oil production after a series of stoppages there.

The western El Feel oilfield is producing 95,000 barrels a day, boosting the country's oil production to around 270,000 bpd, a spokesman for state-run National Oil Corp (NOC) said on Sunday. Output at the field resumed after a protest there ended more than a week ago.

Two tankers were docking at Libya's eastern Hariga oil port to load a total of 1.35 million barrels, the first shipments since the port reopened after a protest by security guards, a spokesman for NOC said on Sunday.-Reuters

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