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.