Oil Futures Record Weekly Declines

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Oil Futures Record Weekly Declines

Oil futures recorded their first weekly declines in three weeks as the possibility of interruptions of oil shipments in Iraq seemed far from becoming an immediate threat.

August-delivery US benchmark light sweet crude exchanged down at 10 cents or 0.1% at $105.74 per barrel on the New York Mercantile Exchange. Prices dropped on the week.

Brent crude, the standard measure for world prices, added 9 cents or 0.1% on the ICE Futures Exchange. Prices dropped 1.3% this week.

Prices have soared for two weeks in a row on concerns that violence in Iraq would escalate to northern regions and hamper national crude output. Global shipments meet demand currently, but a reduction of Iraq’s supplies of more than 2.5 million barrels per day would disrupt stability in the market, according to the Wall Street Journal.

Yet, militants in Iraq have not advanced to the southern region of the country, which hosts key production and shipping facilities, meaning that oil output is yet to be hit. Iraqi lawmakers are scheduled to meet on Tuesday to start the process of electing a new administration.

Jim Ritterbusch of energy consultancy Ritterbusch & Associates told the Wall Street Journal that the slowdown of militant activities in Iraq in the week that ended Friday 27 is tied a easing of fears over oil.

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But oil analyst Michael Cohen for Barclays in the Americas believes worries over Iraqi exports will continue to buoy prices.

Oil exports will witness a big increase, as recent events didn’t reflect negatively on Iraq’s crude output and exports. International oil companies are working normally in Iraq,” Iraqi’s oil minister Abdul Kareem al-Luaibi is quoted by Bloomberg as having said in an interview on June 25.

Brent has soared 3.6% in June as insurgents under the umbrella of the Islamic State in Iraq and Levant took over control of the Mosul city in northern Iraq and marched towards the country’s capital.

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