Brent Crude Advances on Escalating Iraq Tension, WTI Touches Near $106

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Brent Crude Advances on Escalating Iraq Tension, WTI Touches Near $106

Brent crude advanced as militants in Iraq captured more areas in Iraq, the second-largest producer of oil within OPEC. In New York, West Texas Intermediate exchanged almost at the $106 mark.

Iraqi troops have been for two weeks fighting the Sunni Islamic State in Iraq and the Levant for control of the Baiji refinery located north of Baghdad. Tensions in the country soared this month when ISIL gained control northern city of Mosul on June 10 and marched towards towns just north of the Iraqi capital. A government report to be released tomorrow is expected to show that US crude inventories dropped for a fourth week.

“The strength of the oil market is a reflection of the continuing fighting in Iraq. ISIL forces continue to advance and we’re getting conflicting news about the Baiji refinery. If not for the troubles in Iraq we would be looking at lower prices,” Michael Lynch of Massachusetts-based Strategic Energy & Economic Research told Bloomberg.

The per-barrel price of Brent for August delivery added 45 cents or 0.4% to $114.57 on the London-based ICE Futures Europe exchange as of 1:44 pm New York time. Contracts hit $115.71 on June 19, a high last seen on September 9. The contract plunged 0.6% on Monday, suffering the biggest loss since May 16. Trading on the London exchange was 45% higher than the average for the past 100 days.

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On the New York Mercantile Exchange, August-delivery WTI added 20 cents to $105.97 per barrel. Futures hit $107.73 on June 20, an intraday high not recorded since September 19. Volume of all futures exchanged was 29% lower than average.

According to the Wall Street Journal, ISIS proclaimed to have taken full control of Iraq’s largest oil refinery in Beiji. But on Tuesday, state-run Al Iraqiyya TV station insisted the government still controlled the refinery and that normal operations would resume within days.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com