Oil futures slip as risks of supply disruptions in Iraq continue to fade

The price of oil slipped again Thursday as the risk of supply disruptions in Iraq faded and key export terminals in Libya were expected to reopen.

Benchmark West Texas Intermediate crude for August delivery fell 42 cents to US$104.06 a barrel on the New York Mercantile Exchange, its sixth consecutive day of decline. On Wednesday, the contract fell 86 cents to $104.48.

Brent crude, a benchmark for international oils, fell 24 cents to US$111 a barrel in London.

Oil prices in recent weeks have largely been driven by concerns that violence in Iraq, OPEC’s second-largest producer, would disrupt supplies. Oil reached a 10-month closing high of US$107.26 on June 20.

The al-Qaida-inspired Islamic State of Iraq and the Levant has rampaged across Iraq in recent weeks, feeding off the chaos of neighbouring Syria’s civil war to seize control of a large chunk of territory in Iraq and effectively erasing the border between the two countries.

Despite the chaos, Iraqi oil production continues and prices began to stabilize when the militants’ advance appeared to have slowed after encountering stiff resistance in Shiite-majority regions of Iraq.

Meanwhile, an agreement in Libya between the central government and a regional militia was expected to lead to the reopening of two eastern oil terminals that would boost the country’s crude exports by about 500,000 barrels a day.

Olivier Jakob of Petromatrix in Switzerland said that since the start of the crisis in Iraq, “the crude oil market has seen no interruption of supply from the south of Iraq, an increase of supply from the north of Iraq (Kurdistan) and the re-opening of ports in Libya.”

In other energy futures trading on the Nymex, wholesale gasoline was little changed at US$3.02 a U.S. gallon (3.79 litres), heating oil fell two cents to US$2.93 a gallon and natural gas rose five cents to US$4.41 per 1,000 cubic feet.

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