Brent crude held above $114 a barrel today near a nine-month high, supported by concerns about potential supply disruptions due to fighting in Iraq.
Brent was poised for a third day of gains following a rise of more than 4 per cent last week after Islamic militants seized much of northern Iraq after routing Baghdad’s forces.
"The oil market remains on 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 was up 41 cents at $114.67 a barrel earlier, after ending 81 cents higher at $114.26 a barrel, its highest settlement since September 6th last year.
US crude for July delivery rose 51 cents to $106.48 a barrel. The contract, which expires tomorrow, 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 Mr 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 yesterday after data from the US Energy Information Administration (EIA) showed domestic crude inventories declined 579,000 barrels in the week ending June 13th, much less than the drawdown of 5.7 million barrels reported by industry group American Petroleum Institute (API).
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.
“This build is consistent with our long-held view that the incentive to move barrels from Cushing to the Gulf Coast would eventually diminish,” said analysts at
BNP Paribas in a note.
"But this latest build could initiate a sell-off on West Texas Intermediate, especially given the recent price outperformance related to events in Iraq," they said.
Reuters
