Brent crude dropped for a second day as it became more likely that Iraq’s oil shipments won’t be affected by violence in the country. West Texas Intermediate declined in the wake of speculation that a rise to a nine-month high last week was exaggerated.
Contracts lost as much as 0.7% in London. Kurdish forces are guarding Kirkuk, the fourth-largest oilfield in Iraq, against Islamist insurgents. Shipments from Iraq’s Basrah oil terminal are expected to increase in July. The International Energy Agency said on Tuesday that Iraqi oil production has not been affected by the violence.
“What we know now on Iraq has already been taken into the price, so for a further rise there would need to be an escalation that affects supply. We are coming out of an overbought situation so there is a bit of market retracement,” Ole Hansen of Copenhagen-based Saxo Bank told Bloomberg.
August-settlement Brent plunged as much as 78 cents to exchange at $112.16 per barrel on the ICE Futures Europe exchange. The benchmark hit $112.73 as of 1:28 in London. The volume of futures changing hands was almost 50% over the average for the past 100 days. Prices have soared 1.8% this year.
The per-barrel price of WTI for July delivery slid as much as 89 cents to $106.01 in digital trading on the New York Mercantile Exchange. The future closed last week’s trading at the highest price since September 18, at $106.91. Brent’s premium to WTI for the same month expanded for a second day to $6.88 per barrel.
Brent increased 4.4% last week, the highest rally since July, as chaos in Iraq fueled fears that shipments from the second-largest producer in the OPEC may be hampered.
According to CTV News, oil prices also declined after the US sent a small number of troops to Iraq, helping calm concerns over possible disruptions.
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