Oil futures hold near nine-month highs on escalating Iraq unrest
New York (Platts)--16Jun2014/525 pm EDT/2125 GMT
Oil futures held near nine-month highs Monday on concerns that
escalating violence in Iraq could spread to the country's oil-producing
southern region.
ICE August Brent settled 48 cents higher at $112.94/barrel. The
front-month contract reached $113.28/b during the session, near Friday's
nine-month high of $114.68/b -- the highest level for a front-month
contract since September 2013.
NYMEX July crude settled 1 cent lower at $106.90b; still the contract
remains in the upper end of a recent range between $106.37/b and
$107.68/b -- a nine-month high for front-month crude reached on Friday.
In products, NYMEX July ULSD settled 1.03 cents higher at $2.9979/gal
and July RBOB ended 1.41 cents higher at $3.0718/gal.
Crude futures were higher as reports of escalating violence in Iraq
continued to ratchet up fears of a supply disruption from the second
largest OPEC producer, said Gene McGillian, analyst at Tradition Energy.
OPEC Secretary General Abdalla el-Badri said Monday the oil market had
been spooked by the ongoing violence in Iraq, and said that if the
situation were to change in the coming months, OPEC would look again at
what action it could take.
Phil Flynn, senior analyst at Price Futures Group, noted that Iraq's
army was trying to fight back the Islamic State of Iraq and Syria (ISIS)
that has taken over northern cities like Mosul and Tikrit and its
300,000 b/d refinery.
And while the oil still flows out of Iraq, Flynn noted that the natural
gas to Ukraine and Europe does not, which also aided the upside in
futures.
"But the market appears to have mostly priced in this risk and the fact
that Europe is well supplied with natural gas and that it is summer is
easing the upward momentum," Flynn said.
The head of Russia's Gazprom said Monday that the transit of Russian gas
via Ukraine to Europe is continuing as normal despite Moscow halting
supplies to its western neighbor (See story, 1118 GMT).
--Alison Ciaccio,
alison.ciaccio@platts.com
--Edited by Richard Rubin,
richard.rubin@platts.com
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