WTI Drops, Brent Soars on Iraq Shipment Concerns

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WTI Drops, Brent Soars on Iraq Shipment Concerns

West Texas Intermediate oil declined to a seven-month low as traders sold the September contract before expiry and bought cheaper crude for future settlement. September WTI oil contracts expire tomorrow. Brent soared.

Brent declined yesterday as Kurdish and Iraqi forces took control of Iraq’s largest dam, slowing progress by Islamic State Militants.

“Nobody’s interested in taking crude for September delivery. If you don’t need the physical barrels, you are going to sell. The spread has been all over the place the last few days as expiration approaches,” Bob Yawger of New York-based Mizuho Securities USA Inc. told Bloomberg.

WTI for September settlement dropped $1.23 or 1.3% to $95.18 per barrel as of 12:42 pm on the New York Mercantile Exchange. Futures declined to $95.11, the lowest price since Jan. 21. The more-active October contract was down 66 cents, or 0.7% to $93.09. The September crude traded $2.66 higher than the October contract yesterday.

US crude inventories likely shed 1.75 million barrels last week, a Bloomberg survey median of 10 analysts showed before data from the Energy Information Administration is released tomorrow.

Brent bounced back from a 14-month low today, as the threat of interruptions to Iraqi oil shipments overshadowed surging global inventories and weak demand, Reuters reported.

The October-delivery Brent crude contract added 4 cents to trade at $101.64 per barrel as of 12:56, after dropping to $101.07, the lowest price since June 2013, the same month Brent plunged below the $100 per barrel price.

Lukoil of Russia reported on Tuesday it had supplied 1 million barrels of oil from the West Qurna-2 oilfield in southern Iraq, its first export from the field amid escalation of violence in Iraq.

Libya also was expected on today to start loading its first oil tanker in one year from Es Sider terminal. The National Oil Corp of Libya said the nation’s oil output had soared to 562,000 bpd.

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