Oil consolidates as worries about Iraq ease – MarketWatch



NEW YORK (MarketWatch) — U.S. benchmark oil prices hovered near unchanged on Tuesday, consolidating recent gains ahead of an update on weekly U.S. supply levels as worries about imminent risks to oil production in Iraq softened.

Nymex WTI crude oil for July delivery /quotes/zigman/2196848/realtime CLN4 -0.14% trimmed early losses but remained down 2 cents at $106.88 a barrel. The contract on Monday shed 1 cent to close at $106.90 a barrel. Prices last week jumped 4.1%, the largest weekly percentage gain since the week ended Dec. 6.

People gather at the site of a car-bomb attack near Basra June 11, 2014.

ICE August Brent futures /quotes/zigman/2648929/realtime UK:LCOQ4 +0.43%  rose 55 cents, or 0.5%, to $113.49 a barrel.

“Iraq will remain in the headlines as far as the crude market is concerned. We still do not expect gains to hold beyond last week’s highs unless supplies further south are threatened and the Iraqi army struggles to hold its defence around Baghdad,” said Andrey Kryuchenkov, oil strategist at VTB Capital in London. “In such a scenario Brent will risk retesting 115%. Jittery trading will prevail this week, with volatile swings in the sensitive oil price risk premium.”

Oil prices were still hanging near nine-month highs, the gains triggered in recent sessions as Sunni-led insurgents, seeking a strict Islamic state in Iraq, have seized towns in a push toward the capital Baghdad. Violence escalated over the weekend as rebels, led by the Islamic State in Iraq and the Levant, or ISIS, showed photos of the execution of hundreds of Shiite Iraqi soldiers on Twitter.

The fighting, however, has been away from the center of Iraq’s oil production in the south. Read: Why traders may be overconfident about the safety of Iraq’s oil exports .

“At this stage, the situation in Iraq remains fluid, but we feel that the risks to disruptions to southern exports looks limited,” said Credit Suisse analyst Thomas Adolff, in a note to clients Tuesday. “The deteriorating investment climate in Iraq, however, is likely to have an impact on the outlook for supply growth in the south.”

Investors later Tuesday will turn their attention to data from trade group American Petroleum Institute, due at 4:30 p.m. Eastern. Analysts polled by Platts expect a fall in U.S. crude oil stocks of 1.4 billion barrel for the week ended June 13. Inventory data from the Energy Information Administration is due Wednesday.

“The expected draw in crude oil stocks will likely be a product of higher crude oil runs at U.S. refineries,” wrote Platts, adding that analysts project U.S. refinery utilization rates will rise by 1.3 percentage points to 89.2%.

In other action in the energy complex, natural-gas futures for July /quotes/zigman/2308005/realtime NGN14 +0.04% were little changed at $4.71 per million British thermal units. July gasoline /quotes/zigman/5317481/realtime RBN4 +0.47%  turned up 2 cents to $3.08 a gallon and heating oil /quotes/zigman/9821450/realtime HON4 +0.67%  rose 2 cents to $3.02 a gallon.
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