Global leaders and central bankers are worried about the effects of the high price of brent and crude oil on inflation and growth. This situation is posing an immediate threat that politicians are having to deal with immediately. Although there has been little actual effect on exports from Iraq, with production numbers remaining constant the fears of the possibility has pushed brent oil to trade at 113.07 and crude oil to 105.48. Brent oil is slowly easing back within normal ranges while crude oil speculators continue to try to push crude prices higher. Crude had escalated to $105 a barrel during the crisis in the Ukraine and never eased below the $102 price level which was then compounded by the violence and now civil war in Iraq. Ease of fears over exports disruptions from Iraq and assurances from United Nations Iraq Special Envoy Nickolay Mladenov that Iraq’s southern oilfields, which produce most of the nation’s 3.3 million barrels per day, remained unaffected, cooled oil prices on both sides of the Atlantic.
Iraq ships 90 percent of its crude exports from southern terminals, which are far from the Sunni insurgency. The country’s oil exports in June were near record rates at around 2.53 million barrels per day. The conflict in Iraq has added about a $3 per barrel risk premium into the Brent and U.S. crude oil market. On the NYMEX, WTI Crude oil prices declined by 1.42 percent touched a weekly low of 105.43 and closed at 105.74.
The US weekly inventory report once again failed to boost any major optimism into oil prices with US crude oil stocks rising 1.7 million barrels for the week ended June 20. Stocks rose for the second week in a row led by increase in imports and persistently higher production levels locally. On the product front, gasoline stocks increased by 700,000 barrels while implied demand for total motor gasoline per Bloomberg data too fell to 456,000 BPD to 9.18 MBPD. On a broader sense, when we look at the anticipation over inventory data wherein higher supplies remain a concern for oil and Iraq issues too remained highly dim, it is likely that the commodity might see correction extending for few more sessions in the US. as reported by Karvy Commodities. Gasoline prices continue to climb adding 22 points this morning to trade at 3.0674 as US drive season hits its high peak with the 4th of July holiday at the end of this week.
Natural gas continues to plummet down by 24 points this morning as the weekend weather report was nowhere near as warm as expected. US seasonal temperatures are holding at norm or slightly below, reducing residential demand. Natural gas is trading at 4.408 close to $1 higher than the bottom last year between seasons. U.S. natural gas futures fell on Friday and ended the week more than 2 percent lower as a string of larger-than-average weekly injections has begun to ease concerns about adequate gas supply for winter. Bearish sentiment continued to weigh on Friday as the June Fourth holiday was expected to dent industrial demand for natural gas. Over the next two weeks, U.S. weather models forecast slightly below seasonal temperatures, according to forecast Thomson Reuters Analytics.