West Texas Intermediate and Brent headed for a second weekly drop amid speculation that Iraq’s crude production will remain unaffected by violence and as Libya prepares to resume exports from two terminals.
WTI futures were little changed in New York after falling for a sixth day yesterday, the longest losing streak since May 2012. Fighting in Iraq hasn’t spread to the south, home to more than three-quarters of its output. Libya will start shipping from Es Sider and Ras Lanuf at full capacity after taking back control from rebels, according to National Oil Corp. Hurricane Arthur is approaching the US East Coast and may reduce driving over the Fourth of July holiday.
“The dying down of geopolitical tensions is clearly depressing oil prices,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone today. “The market is removing some of the risk premium. West Texas has now fallen below the key support level of $105.25 a barrel, meaning that risks are now on the downside.”
WTI for August delivery was at $103.97 a barrel in electronic trading on the New York Mercantile Exchange, down 9 cents, at 1:21 p.m. Sydney time. The contract slid 42 cents to $104.06 yesterday, the lowest close since June 6. The volume of all futures traded was about 51 percent below the 100-day average. Prices have declined 1.7% this week.
Brent for August settlement was 5 cents lower at $110.95 a barrel on the London-based ICE Futures Europe exchange. The contract has decreased 2.1% this week, the most since January. The European benchmark crude traded at a premium of $6.98 to WTI, compared with $7.56 on June 27.
Fighting in Iraq has been concentrated in the north, where insurgents from a breakaway al-Qaeda group, now known as the Islamic State, captured the city of Mosul in June. The nation, the second-largest producer in the Organization of Petroleum Exporting Countries, will ship 2.8 million barrels a day this month, close to a record high, loading programs obtained by Bloomberg show.
In Libya, shipments will resume “as soon as possible” at the two ports and talks on crude sales will start with international companies, Mohamed Elharari, a spokesman for state-run National Oil, said yesterday. The country has become OPEC’s smallest producer the past year because of unrest.
Hurricane Arthur strengthened to a Category 2 storm as it reached the US coast, according to the National Hurricane Center. The system made landfall at Cape Lookout, North Carolina, packing maximum sustained winds of 100 miles (161 kilometers) per hour, the center said in an advisory at 11.30pm Eastern time yesterday.
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