MARKET WATCH: Brent crude tops $114/bbl on Iraqi insurgency

Crude oil futures declined modestly on the New York market June 18 after a weekly inventory report showed US crude oil supplies declined less than analysts had expected for the week ended June 13, and Brent crude oil prices climbed again on the London market given rising concerns about Iraq.

The US Energy Information Administration estimated commercial crude oil inventories, excluding the Strategic Petroleum Reserve, decreased 600,000 bbl to 386.3 million bbl.

In its weekly report on natural gas in underground storage in the Lower 48, EIA on June 19 estimated levels at 1,719 bcf as of June 13, a net increase of 113 bcf from the previous week. Stocks were 706 bcf less than last year at this time and 851 bcf below the 5-year average of 2,570 bcf.

In Iraq, government deployed counterterrorism units and armed helicopters against militants fighting for the Islamic State of Iraq and al-Sham (ISIS) in a battle for control of Iraq’s largest refinery at Beiji.

Fire broke out previously after militants attacked the 310,000-b/d hydroskimming and hydrocracking refinery in Salahudin province, 200 km north of Baghdad (OGJ Online, June 18, 2014).

News reports about the refinery varied. Gen. Qassim Atta said on Iraqiya state television that Beiji refinery was under full government control, but Oil Ministry officials told reporters that insurgents still controlled at least part of the complex.

Late June 18, ministry officials said ISIS fighters had retreated from the refinery to an adjacent area for refinery employees, who have fled the scene.

Numerous US lawmakers and President Barack Obama’s administration are suggesting a new government might be needed to resolve the unrest in Iraq. They suggest Prime Minister Nouri al-Maliki, a Shiite leader, will be unable to reconcile differences with Iraq’s Sunni minority.

Energy prices

The New York Mercantile Exchange July crude oil contract price dropped 39¢ on June 18 to close at $105.97/bbl. The August contract declined by 28¢ to $105.59/bbl.

The natural gas contract for July declined by 5¢ to a rounded $4.66/MMbtu. On the US cash market, gas at Henry Hub, La., was $4.70/MMbtu, up 4¢.

Heating oil for July delivery was up 2¢ to a rounded $3.04/gal. Reformulated gasoline stock for oxygenate blending for July delivery gained less than a penny to a rounded $3.10/gal.

The August ICE contract for Brent crude delivery rose 81¢, closing at $114.26/bbl. The September contract climbed 77¢ to $113.59/bbl. The ICE gas oil contract for July increased $4.25 to $935/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for June 18 was unavailable because OPEC’s Secretariat office was closed June 19.

Contact Paula Dittrick at paulad@ogjonline.com.

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