Oil hits month low below $110 in 7-day losing streak

Laborers work at the Rumaila oil refinery in Zubair near the city of Basra, Iraq.

Laborers work at the Rumaila oil refinery in Zubair near the city of Basra, Iraq.

NEW YORK: Brent crude fell for its seventh straight session, hitting a one-month low below $110 a barrel on improved prospects for a rise in Libyan oil exports and easing fears of supply disruption in Iraq.

The benchmark is headed for its longest losing streak since October 2012, and has shed more than 5 percent since the Iraq crisis drove prices to a nine-month high of $115.71 in June.

Libya’s El Sharara oilfield has resumed operations and will increase output gradually, a spokesman for National Oil Corp. (NOC) said, which may free up more oil for export after a port deal was agreed with rebels last week.

“It’s the same factors that have been dragging Brent lower for the last sessions; it’s liquidation selling by the longs who piled in on the move to the 9-1/2-month high,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Illinois.

Brent crude for August delivery fell 98 cents to $109.26 a barrel by 11:14 a.m. EDT (1514 GMT).
The US benchmark slipped 8 cents to $103.45 in choppy trading and was on course for its eighth straight day of declines.

The spread between the two benchmarks arrowed by nearly $1 to $5.81.

Olivier Jakob, an analyst at Petromatrix in Zug, Switzerland, said traders see less risk militants in Iraq will advance beyond the edge of Baghdad and disrupt oil flow in the country’s south.

“The oil fields in the south are not in direct danger, and the oil fields in the north and Kurdistan are also not in danger. So for now, it is difficult to see any strong disruptions to exports,” Jakob said.

The Brent future contracts for delivery in September moved to a small premium over contracts for delivery next month, a condition known as “contango,” which traders said was an indication of weak demand.

In Libya, preparations are under way to reopen two major oil ports in the east that were shut by protests almost a year ago. The Ras Lanuf and Es Sider ports make up more than a third of the OPEC producer’s export capacity.

Any additional Libyan barrels that may emerge would be regarded as a negative for Brent, BNP Paribas analysts said in a note, though they said question marks remained about how much maintenance would be needed at oilfields and pipelines.

Libya’s oil output was at 326,000 barrels per day, a NOC spokesman said on Monday, well below its post-civil war high near 1.4 million bpd.

Investors are also awaiting weekly oil inventory data from the US for clues on demand in the world’s largest oil consumer.

US commercial crude inventories were forecast to have dropped in the week to July 4, a preliminary Reuters survey of five analysts showed. Distillate stockpiles were expected to have risen and gasoline inventories to be unchanged.

 

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