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Rediff News  All News  » Business » Crude oil above $114; near 9-month high on Iraq turmoil

Crude oil above $114; near 9-month high on Iraq turmoil

June 19, 2014 10:12 IST

A worker at an oil rigBrent crude held near a nine-month high above $114 a barrel on Thursday supported by concerns about potential supply disruptions due to fighting in Iraq.

Oil prices were poised for a third day of gains following a rise of more than 4 percent last week after Islamic militants seized much of northern Iraq as Baghdad's forces there collapsed.

"The oil market remains in high alert, but is in a holding pattern at this stage awaiting further developments in Iraq," said Michael McCarthy, chief strategist at CMC Markets in Sydney.

Brent crude gained 21 cents at $114.47 a barrel at 0325 GMT, after ending 81 cents higher at $114.26 a barrel, its highest settlement since September 9 last year.

US crude for July delivery rose 44 cents to $106.41 a barrel.

The contract, which expires Friday, settled 39 cents lower in the previous session. "While US crude remains above $105.25 and Brent remains above $110.50, technically the risks remain to the upside for both contracts," said McCarthy.

Oil prices found support after the US Federal Reserve gave a positive assessment of the country's economy and committed to retaining accommodative monetary policy.

However, US crude eased on Wednesday after data from the US Energy Information Administration showed domestic crude inventories declined 579,000 barrels in the week ending June 13, much less than the drawdown of 5.7

million barrels reported by industry group American Petroleum Institute.

A Reuters poll of analysts had forecast a drawdown of 700,000-barrels.

Crude stocks at Cushing, Oklahoma rose by 247,000 barrels -- the first rise at the oil storage hub after nine weeks of consecutive drawdowns.

Iraq asks for air support Concerns arose over Iraq's ability to increase oil production or even maintain current levels, after the head of state-run South Oil Company Dhiya Jaffar said Exxon Mobil has carried out a "major evacuation" of their staff and BP had evacuated 20 percent of its staff.

Sunni militants have already taken control of most of Iraq's largest oil refinery, located in Baiji in northern Iraq, an official at the refinery said on Wednesday.

Iraq has asked the United States for air support in countering the Sunni rebels, a top U.S. general said on Wednesday, after the militants had seized major cities in a lightning advance.

But General Martin Dempsey, chairman of the US military's Joint Chiefs of Staff, gave no direct reply when asked at a congressional hearing whether Washington would agree to the request.

President Barack Obama came under pressure from US lawmakers on Wednesday to persuade Iraqi Prime Minister al-Maliki to step down over what they see as failed leadership in the face of an insurgency threatening his country.

Jacob Gronholt-Pedersen in Singapore
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