Oil firmer, eyes recovery on Iraq, refinery woes

Oil firmer, eyes recovery on Iraq, refinery woes

SINGAPORE (Reuters): Oil prices edged up a little in Asia on Friday, finally stemming a two-day beating from swelling U.S. oil stocks.

The more upbeat tone came on the back of a persistent Iraqi oil export outage and U.S. refinery woes.

Benchmark July light crudes last stood at $27.90 a barrel at 0615 GMT for a gain of 15 cents over the almost unchanged settlement on Thursday in New York.

Oil prices which have traded firmly between $28 and $30 in the last month, turned down towards $27 levels from Wednesday after U.S. weekly stocks reports showed an across-the-board inventories jump.

Crude stocks were significantly higher -- about 25 million barrels above year-ago levels -- while gasoline stocks also rose steadily, easing fears of a summer driving season supply crunch.

This overshadowed supportive news such as the Iraqi oil export suspension in protest against United Nations sanctions.

Iraqi leader Saddam Hussein on Thursday urged Russia to use its U.N. Security Council veto to ditch a U.S.-British draft resolution aimed at overhauling sanctions imposed on Baghdad 11 years ago.

Saddam said Baghdad would not back down on its decision to reject the draft.

"Our stance is final," he reportedly told Russian Emergencies Minister Sergei Shoigu.

Iraq halted oil-for-food exports on Monday after the U.N. decided to extend the exchange for one month instead of the usual six.

The export suspension could last a month or more, Iraqi officials said.

The U.S. Energy Information Administration (EIA) on Thursday warned that oil prices could jump $6-$10 a barrel if other oil- producing nations do not make up for the estimated two million bpd loss Iraq exports.

It also said that OPEC supply cuts seen in February and April could eat into the market by the third quarter to pull oil inventories in industrialized nations down to last year's thin levels.

The 10 members of the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday in Vienna however decided to adopt a wait-and-see stance and keep output steady.

The cartel, which controls the bulk of world oil supplies, agreed to meet again on July 3 to review their output quotas.

Saudi Arabian Oil Minister Ali al-Naimi said that he had no doubt that more OPEC oil would flow in the third quarter and gave his assurance that OPEC would ensure that Iraq would not be allowed to rock the market.

Meanwhile, several U.S. refinery snags gave gasoline markets a small boost.

A fire reduced runs at BP's Yorktown, Va., refinery and a gasoline tank was on fire at Orion's Norco, La., refinery after being struck by lightning.

On Friday, the U.S. gasoline futures market was up at 89.5 cents a gallon, extending Thursday's gains of 0.81 cents by another 0.65 cents.

The price rally stopped a 25-percent, two-week slide in gasoline futures prices from a futures market record high of over a dollar a gallon.