Oil steady with eye on Iraq, U.S. refineries

Oil steady with eye on Iraq, U.S. refineries

SINGAPORE (Reuters): Oil market were steady on Friday,
consolidating recent gains on concerns over Iraq's oil exports
halt and a U.S. warning of potential California refinery outages
due to power woes.

At 0705 GMT (2.05 p.m. Jakarta time), benchmark U.S. light
sweet crude oil futures were last traded at $29.04 a barrel,
levels unchanged from Thursday's settlement, when the market
gained 20 cents.

Oil has been in a holding pattern near $29 a barrel since
making strong gains on Monday.

The latest move upwards on Thursday came after the U.S.
Department of Energy (DOE) said in a report that nearly a quarter
of California's gasoline refinery production was at risk of
shutting down for up to two weeks if they lose power from
expected rolling blackouts.

The report said that some refineries were at risk because they
have no back-up generators to produce electricity.

It would take seven to 14 days to return most of the
refineries' operating units to full production if they lost
power, the DOE said.

This countered some mid-week relief from inventory data which
showed rising U.S. gasoline stocks and led some in the market to
prematurely banish worries of a summer supply crunch.

Iraq's halt of oil exports in protest over proposed changes to
its oil-for-food program with the United Nations also remains a
key market concern.

Russia said on Thursday it would not rush into a decision to
revamp the Iraqi sanctions, as demanded by the United States and
Britain, thereby raising doubts U.N. Security Council could meet
its July 3 deadline for a deal.

Baghdad, unhappy over the sanctions revamp issue, has stopped
exports since June 4 after the U.N. extended the oil-for-food for
only one month instead of the usual six.

Baghdad rejected on Tuesday the latest Anglo-American proposal
to modify its resolution on sanctions, meant to ease restrictions
on civilian goods imports while cracking down on military goods
and oil smuggling.

A top U.S. energy official on Thursday warned of low U.S fuel
supplies this winter unless Iraq's production is quickly offset
by other producers.

"The recent OPEC meeting and Iraqi cutoff of their oil-for-
food exports could result in oil production levels low enough to
cause us to enter the fourth quarter with low crude oil and
heating oil inventories," said John Cook, director of the
Petroleum Division at the DOE's Energy Information
Administration, at a congressional hearing.

OPEC however has played it cool.

The cartel, which controls the bulk of world traded supplies,
adopted a wait-and-see stance at its output meeting in Vienna on
June 5.

But Qatar's Oil Minister Abdullah bin Hamad al-Attiyah told
Reuters on Thursday that the OPEC will respond to any loss from
Iraq halting its 2.1 million barrel-per-day crude oil exports, to
ensure global supplies are adequate.

"If we see that in July that the market needs more oil, we'll
do it for sure," Attiyah said.

Attiyah said U.S. Energy Secretary Spencer Abraham had asked
that OPEC raise its production level.

Qatar is the smallest producer within the OPEC grouping.