The European benchmark gained as much as 0.7 percent. Fighters from a breakaway al-Qaeda group are in position to seize Iraqi energy infrastructure in the northern part of the country after taking control of Mosul, Iraq’s second-largest city. WTI was little changed before weekly government inventory data. OPEC ministers in Vienna left the group’s output ceiling unchanged at 30 million barrels a day.
“The market is focusing on geopolitical risk, especially with news in Iraq,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “There are worries about the possibility of supply disruption. The bulls are still in control. WTI is going to make a run toward $105 unless the EIA reports a build.”
Brent for July settlement gained 49 cents, or 0.5 percent, to $110.01 a barrel at 9:17 a.m. New York time on the London- based ICE Futures Europe exchange. The volume of all futures was 19 percent above the 100-day average.
WTI for July delivery rose 2 cents to $104.37 a barrel on the New York Mercantile Exchange. Volume was 35 percent below the 100-day average for the time of day. The European benchmark crude traded at a premium of $5.64 to WTI. The spread narrowed for a third day yesterday to close at $5.17.
Fighting in the northern city of Mosul forced a halt in repairs to a 600,000-barrel-a-day pipeline from Kirkuk to the Mediterranean port of Ceyhan, Turkey, the state-run North Oil Co. said in a statement yesterday. Shipments through the line, a frequent target of sabotage, have stopped since March 2, leaving Iraq with a single outlet, by tanker via the Persian Gulf, for its most lucrative export.
Iraq produced 3.3 million barrels of oil a day in May, data compiled by Bloomberg show. An estimated 17 percent of the country’s oil reserves lie in the north, including the Kirkuk oil field, according to the U.S. Energy Information Administration.
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, kept its production target unchanged at 30 million barrels a day, a decision that was widely anticipated.
“There were no surprises with OPEC but the deteriorating situation in Iraq could start to have an effect at the margins,” Michael Hewson, a London-based market analyst at CMC Markets, said by e-mail.
U.S. crude inventories may have declined 2 million barrels last week, a Bloomberg survey showed before the EIA releases its report. The industry-funded American Petroleum Institute said yesterday that supplies expanded by 1.5 million barrels, according to TradeTheNews.com, an information service. Supplies reached 399.4 million as of April 25, the most since the Energy Department’s statistical arm started publishing weekly data in 1982.