Oil prices extend losses on chance of July Iraq restart
Oil prices extend losses on chance of July Iraq restart
LONDON (Reuters): Oil prices extended losses on Tuesday, falling to two-month lows after a dollar-a-barrel slump late on Monday.
Traders said the expectation that weekly U.S. inventory data would show rising stocks and speculation surrounding an early resumption of Iraqi oil exports lay behind the weakness.
The American Petroleum Institute (API) will release weekly statistics later on Tuesday that are expected to record a build in crude and gasoline stocks.
London Brent blend crude traded 18 cents lower at $26.87 a barrel and U.S. light crude was off 14 cents at $27.41.
Prices have fallen this week amid expectations that Iraq could resume oil exports by early July, when a short-term extension of the United Nations oil-for-food program, opposed by Baghdad, expires.
Iraq halted its 2.1 million barrels a day of U.N.-supervised crude sales on June 4 for the duration of the one-month extension in protest at Anglo-American plans for a revamp of Gulf War sanctions.
But a key European diplomat said last week that if there were no agreement on the sanctions review by the end of the extension on July 3, Washington would likely endorse a no-changes six-month rollover of the humanitarian program.
Iraq has said it would resume shipments, some five percent of world exports, if the oil-for-food program were renewed as normal.
That expectation has raised queries over what OPEC might do when it meets in emergency session on July 3 to consider whether or not to raise output.
OPEC delegates said on said Monday the likelihood of a supply boost in July would be reduced if Iraq restarted its normal oil sales.
Cartel ministers, who have cut output twice this year, previously have said they would make up any gap in supply lost to the Iraqi stoppage.
"There is no need to raise supplies in July if Iraq comes back early next month," said one OPEC delegate from a non-Gulf country.
A basket of OPEC crudes that the cartel uses to monitor the market fell to $25.81 a barrel on Monday, near the middle of the group's preferred $22-$28 range.