MARKET WATCH: Iraqi angst sends crude prices higher in New York, London

Angst over a bold military campaign by Sunni insurgents in Iraq and continued supply outages in Libya sent next-month futures prices for Brent crude above $113/bbl on June 12—the highest level this year, according to Paris-based International Energy Agency’s June Oil Market Report.

“An apparent build in China’s crude strategic reserve in April and May, at an average 1.2 million b/d,” IEA said, also is strengthening markets.

IEA reported that global oil demand is forecast to rise to 92.8 million b/d in 2014, up 1.3 million b/d from the agency’s last report. Global oil demand is set to increase sharply from a low of 91.4 million b/d in this year’s first quarter to a high of 94 million b/d in this year’s fourth quarter, IEA said.

In May, global crude supplies rose 530,000 b/d to 92.6 million b/d, IEA said, mostly on a 440,000 b/d increase in production from non-members of the Organization of Petroleum Exporting Countries. “On a yearly basis, world output was up 1 million b/d for the month, as non-OPEC growth of 2.1 million b/d compensated for OPEC declines,” IEA said.

Also in May supplies from OPEC inched up by 85,000 b/d to 29.99 million b/d, IEA said, “with increased Saudi output offsetting declines in Libya.”

Energy prices

The New York Mercantile Exchange July crude oil contract price gained $2.13, closing at $106.53/bbl on June 12. The August contract increased $2.16 to $105.78/bbl.

The natural gas contract for July jumped 25.4¢ to a rounded $4.76/MMbtu, while to August contract rose 25.9¢ to a rounded $4.76/MMbtu. On the US cash market, gas at Henry Hub, La., was $4.50/MMbtu, unchanged from the previous day.

Heating oil for July delivery increased 8.5¢ to a rounded $2.99/gal. Reformulated gasoline stock for oxygenate blending for July delivery was up 8.29¢ to a rounded $3.08/gal.

The July ICE contract for Brent crude delivery jumped $3.07, closing at $113.02/bbl. The August contract gained $3.05 to $112.42/bbl. The ICE gas oil contract for June was unchanged from the previous day at $893/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes for June 12 was $107.39/bbl, rising $1.19.

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