Oil Prices Mixed Amid Tensions in Iraq
October 23 2017 - 4:23PM
Dow Jones News
By Neanda Salvaterra and Alison Sider
Oil prices fluctuated Monday as investors tried to gauge the
potential for supply disruptions resulting from tensions in the
oil-rich Kurdish region of Iraq.
U.S. crude futures settled up 6 cents, or 0.12% to $51.90 a
barrel on the New York Mercantile Exchange. Brent, the global
benchmark, fell 38 cents, or 0.66%, to $57.37 a barrel on ICE
Futures Europe.
A drop in the number of rigs drilling for the U.S. last week
helped lift the U.S. benchmark -- a sign that supplies in the U.S.
will be tightening, analysts said -- U. S. crude prices have risen
in nine of the past 11 trading sessions. The gap between the two
price benchmarks has been relatively wide, helping to spur a surge
in exports of crude from the U.S., and some expect the difference
to narrow in the coming weeks.
"On the WTI side, things are starting tighten up," said Ric
Navy, senior vice president for energy futures at RJ O'Brien &
Associates LLC.
Still, oil prices have been trading within a narrow range
recently.
Donald Morton, senior vice president at Herbert J. Sims &
Co. who oversees an energy trading desk, said there is uncertainty
about how much Kurdish oil production has been disrupted
"There's anxiety over what is really being pumped," he said.
Still, he said oil prices are "way up at the high end of the
trading range" where they have stagnated.
Since a nonbinding Kurdish vote for independence, Iraq's central
government and the region's neighbors in Iran and Turkey have moved
aggressively, shutting down borders and flights.
Iraqi forces retook the oil-rich Kirkuk area, throwing into
question Kurdistan's ability to export oil through Turkey and
raising doubts about investments from big oil companies such as
Chevron Corp.
Iraq, a member of the Organization of the Petroleum Exporting
Countries, also reported that oil exports in the south were
increased by 200,000 barrels a day to make up for the shortfall
from Kirkuk.
"There is spare capacity in the U.S. and in OPEC nations that
makes it difficult for Brent to go above $60, so it is stuck in a
relatively small range," said Olivier Jakob, managing director at
oil consultancy Petromatrix. "Over the weekend, Iraq announced that
it would increase output from the south to offset losses from the
north. That's an illustration of what the market can do when it has
spare capacity."
Still, some analysts point to data showing that U.S. shale oil
producers are poised to bring more crude online, which will weigh
on oil prices.
"The oil market still remains deaf in one ear and is responding
primarily to price-supportive news," said Commerzbank in a recent
note. "The prices of both oil types, and especially of Brent, are
overheated and [we] expect them to correct in the short term."
Since OPEC and 10 other non-OPEC countries struck an agreement
to cut global production by 1.8 million a barrels a day last year,
U.S. producers drilled a total of 7,270 uncompleted wells to
September.
Gasoline futures rose 0.02 cent, or 0.01%, to $1.6783 a gallon.
Diesel futures fell 1.74 cents, or 0.96% to $1.7878 a gallon.
Write to Neanda Salvaterra at neanda.salvaterra@wsj.com and
Alison Sider at alison.sider@wsj.com
(END) Dow Jones Newswires
October 23, 2017 16:08 ET (20:08 GMT)
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