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Oil Falls With Iraq Output Rising Even With Military Action

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West Texas Intermediate oil dropped to a two-week low and Brent fell on signs that the insurgency in Iraq won’t curb output and as U.S. stockpiles climbed.

Iraq’s crude exports will increase next month, Oil Minister Abdul Kareem al-Luaibi said yesterday. Government forces repelled an attack by the Sunni Islamic State in Iraq and the Levant on the Baiji refinery north of Baghdad. U.S. crude stockpiles rose by 1.74 million barrels to 388.1 million last week, the Energy Information Administration said yesterday.

“Prices are retreating because the insurgency hasn’t had a material impact on the Iraqi production and we might be looking at a gain in exports,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Prices are consolidating here just below the nine-month highs.”

WTI for August delivery slipped $1.19, or 1.1 percent, to $105.31 a barrel at 11:21 a.m. on the New York Mercantile Exchange. Prices reached $105.15, the lowest intraday level since June 12. Futures are up 7 percent this year.

Brent for August settlement fell 77 cents, or 0.7 percent, to $113.23 a barrel on the London-based ICE Futures Europe exchange. Futures slipped to $113.11, the lowest level since June 18. Prices have increased 2.2 percent this year.

The European benchmark crude’s premium to WTI widened to $7.92 from $7.50 yesterday.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza

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