LONDON: Oil dropped in New York, snapping four days of gains, as traders took profit amid disruption in Iraq and US product inventories grew.
Futures fell as much as 1.7 per cent after rising almost 3 per cent the past four sessions. Gasoline stockpiles expanded for a fourth week, while distillate supplies rose for the first time since August, US. Energy Information Administration data showed. In the Middle East, exports from northern Iraq fell by two-thirds amid fighting between government troops and Kurdish forces.
Crude had risen since late last week as tensions in Iraq, Opec’s second-largest producer, led to the halt of production at two Kirkuk fields. The resulting export curbs pushed oil in the US to a three-week high on Wednesday, but Brent has failed to breach last month’s peak and dropped below $58 following the inventory data.
Prices reflect “oil bulls taking profit after the supply disruption in Iraq failed to drive Brent to new highs,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “It’s a classic risk-off move. On balance, I believe yesterday’s EIA report was net bearish.”
West Texas Intermediate for November delivery, which expires Friday, dropped as much as 89 cents on the New York Mercantile Exchange, and was down 85 cents at $51.19 a barrel as of 8:18am local time. Prices closed at $52.04 on Wednesday, the highest since Sept. 27. Total volume traded Thursday was about 7 per cent above the 100-day average. The more-active December contract lost 84 cents to $51.42.
Inventory gains
Brent for December settlement fell 96 cents to $57.19 a barrel on the London-based ICE Futures Europe exchange, after adding 27 cents on Wednesday. The global benchmark crude was at a premium of $5.77 to WTI for the same month.
US gasoline inventories expanded by 908,000 barrels last week, while distillate supplies climbed to 134.5 million barrels, according to the EIA. Refinery utilisation slipped as plants including Exxon Mobil Corp.’s Joliet refinery in Illinois were said to carry out maintenance.
In northern Iraq, flows by pipeline to the Turkish port of Ceyhan fell below 200,000 barrels a day on Thursday from a normal daily level of 600,000 barrels, according to a port agent report. Production in the disputed Kirkuk province has slumped at fields captured by the government from the Kurds following a Kurdish independence referendum on Sept. 25.
For a Gadfly column on how the halt in Iraq could be temporary, click here
Opec sent its strongest signal yet for an extension of production cuts until the end of 2018, saying preparations for the next meeting are taking their lead from Russian President Vladimir Putin’s tentative backing for a further nine-months of curbs. The producers’ group has defied the sceptics in eliminating half the oil-inventory surplus, said Secretary-General Mohammad Barkindo.
