Oil declines as Iraq violence seen sparing southern production

6/29/2014

Oil declines as Iraq violence seen sparing southern production

BEN SHARPLES and ANTHONY DIPAOLA

NEW YORK (Bloomberg) -- West Texas Intermediate fell for a third day and Brent dropped amid speculation Iraq’s oil output won’t be affected by violence in OPEC’s second-biggest producer.

Futures slipped as much as 0.3% in New York, extending last week’s 1.4% decline. The Russian military is helping prepare Iraq’s air force to recapture areas of the country’s north held by Islamist militants. Fighting hasn’t spread to the south, home to more than three-quarters of the nation’s oil production.

“We’ve already started to see the risk premium easing off,” Tom James, the Dubai-based managing director of Navitas Resources, said by phone yesterday, June 28. “Markets are seeing there’s been no blockage to exports, and that Saudi Arabia would likely supply any shortfall if they need to.”

WTI for August delivery dropped as much as 34 cents to $105.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $105.48 at 9:44 a.m. in Sydney. The contract slid 10 cents to $105.74 on June 27. The volume of all futures traded was about 41% below the 100-day average. Prices are up 2.7% this month and 3.8% in the second quarter.

Brent for August settlement slid as much as 26 cents, or 0.2%, to $113.04 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.62 to WTI.

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