Oil pares gain as Iraq pledges to develop production in Kirkuk

By Jessica Summers on 10/17/2017

NEW YORK (Bloomberg) -- Oil eased gains as Iraq said it planned to develop the oil industry in Kirkuk in a way that enhances exports.

Futures rose as much as 0.7% in New York, before losing steam to trade little changed. Iraq called for cooperation to keep exports in the northern part of the country flowing after the government regained control of oil fields and energy facilities in Kirkuk. Its control of the sites will allow for more investment, according to the Oil Ministry.

“The anxieties over the Iraq and Kurdistan situation are rapidly easing,” said  John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, in a telephone interview. “The risk premium that had gotten built into prices from what looked to be a significant battle brewing is coming right back out, because there was no battle.”

Crude has rallied for three straight sessions, holding above $51/bbl in New York. The oil market is grappling with intensifying geopolitical risks as uncertainty swirls over the impact of tensions surrounding nations such as Iraq, Iran and the U.S., Goldman Sachs Group Inc. said.

Yet, while Iraq’s government is clashing with Kurdish forces, both sides have a financial incentive to keep oil flowing, because low production costs create opportunities for “high revenue” on every barrel sold, the bank said.

West Texas Intermediate crude for November delivery rose 7 cents to $51.94/bbl at 9:38 a.m. on the New York Mercantile Exchange. Total volume traded was about 21% below the 100-day average.

Brent for December settlement advanced 23 cents to $58.05/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.85 to WTI for the same month.

Kurdish oil flow

Kurdish company KAR Group stopped pumping crude at the Avana and Bai Hassan deposits in Kirkuk after technicians failed to report for work and security guards left amid fighting, an official at the central government-run North Oil Co. said Monday. 

The Iraqi and Kurdish oil flow to the Turkish port of Ceyhan declined in the past 24 hr, according to a port agent report Tuesday. The port has received 510,000 bbl of crude in the past day from Northern Iraq compared with a flow of 650,000 barrels in the prior 24 hours.

Still, the Suezmax Minerva Georgia completed loading on Monday at the Turkish port of Ceyhan that receives crude from Iraq’s Kurdish region, while four other tankers are waiting to take on Kurdish crude, according to shipping agent reports and tanker-tracking data compiled by Bloomberg.

Focus will now turn to U.S. inventory data, with a Bloomberg survey showing that U.S. oil inventories probably fell by 3 MMbbl last week, while gasoline stockpiles likely slid by 1 MMbbl.

The industry-funded American Petroleum Institute will release its inventory data later on Tuesday, while the Energy Information Administration is scheduled to disclose its tallies on Wednesday.

Related News ///


Comments ///

comments powered by Disqus