MW: Oil set for weekly loss as Iraq fear premium fades
By Myra P. Saefong and William L. Watts, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures on Friday were on track for a weekly loss as worries over the fate of Iraq’s oil exports fade and traders weigh healthy domestic U.S. crude supplies.
On the New York Mercantile Exchange, oil for August delivery CLQ4 -0.09% fell 21 cents, or 0.2%, to $105.63 a barrel. It traded between a high of $106.19 and a low of $105.48 in electronic trading. Tracking the most-active contracts, oil is poised for a 1.1% weekly decline.
August Brent crude UK:LCOQ4 +0.18% on the ICE Futures exchange rose 25 cents, or 0.2%, to $113.46 a barrel.
“The oil market appears to be gradually pricing out the fear premium associated with Iraq again,” wrote Eugen Weinberg, head of commodity research at Commerzbank, in a note. Brent has pulled back from a nine-month high set last week above $115 a barrel as investors become “convinced that the fighting in the north of Iraq will have no impact on the oil supply in the south.”
Iraq exports around 2.5 million barrels of oil a day. Export-oriented facilities are concentrated in the Shia-dominated south and investors appear increasingly confident those areas will remain insulated from the Sunni-led insurgency in the north of the country. The violence, however, is expected to curtail Iraq’s efforts to significantly boost oil production in the years ahead.
The Islamic State of Iraq and Syria rebel group has not attacked Baghdad, “raising hopes that the record oil production and exports from the south will continue,” said Phil Flynn, senior market analyst at Price Futures Group. “Yet with the weekend ahead of us it is hard to imagine that traders will brace the short side aggressively.”
Oil was pressured earlier this week as data showed U.S. crude stockpiles rose last week after posting declines over the previous three weeks.
On Friday, data showing a rise in June consumer sentiment failed to provide much support for oil prices. Platts also reported that May China oil demand fell to its lowest level in nine months.
On Nymex Friday, August natural gas NGQ14 -1.08% fell 4 cents, or 0.9%, to $4.40 per million British thermal units on its first full day as a front-month contract. Tracking the most-active contracts, futures prices for the fuel were set for a loss of roughly 3% on the week.
July gasoline RBN4 +0.42% rose nearly a cent to $3.09 a gallon, while July heating oil HON4 +0.09% was little changed at $3.015 a gallon. The July contracts, which expire at the Nymex close on Monday, where set for losses of more than 1% for the week.
