Oil tracks sideways above $30 a barrel

Oil tracks sideways above $30 a barrel

LONDON (Reuters): Oil prices tracked sideways on Thursday above US$30 a barrel as dealers balanced concerns over the possible release of U.S. government reserves against news of a fall in exports from big Middle East producer Iraq.

London Brent blend futures traded 16 cents higher to $30.27 a barrel and U.S. light crude was unchanged at $31.90.

U.S. talk about potentially releasing some of its coveted oil reserve was greeted bearishly at the open, but news that Iraq's June exports would be lower than expected helped reverse sentiment on the volatile market.

Prices remain well above the $25 a barrel target set by the Organization of the Petroleum Exporting Countries after the group released additional crude last week.

A host of potentially bearish news -- including OPEC's decision to raise output by 708,000 barrels per day (bpd), or about three percent -- has yet to dull the stubbornly bullish market, each new statement seeming only to fan the flames.

U.S. President Bill Clinton poured cold water on the market on Wednesday, saying he could again open up the coveted Strategic Petroleum Reserve (SPR) to help refiners weather temporary supply problems and keep gasoline production flowing.

Earlier this month, the U.S. Energy Department took the rare step of releasing 500,000 barrels of crude oil from the emergency stockpile to Citgo Corp's refinery in Louisiana after a shipping accident blocked crude oil shipments to the plant.

"If I can find any other kinds of backlogs like there, where there is something I can do to get the flow going, I will do that as well," Clinton told a news conference. He gave no indication of whether such a move was imminent.

Opening taps on the SPR would help U.S. refiners cope with demand for the new, super-green gasoline, which is now required for one-quarter of U.S. drivers.

But the market received fresh support on Thursday from news that Iraq's exports were set to drop by about 450,000 bpd to 1.94 bpd this month due to reduced loadings at Turkey's Ceyhan port.

Industry sources said tanker loadings at the port have been halted since Sunday due to short notice after the United Nations approved Iraq's oil-for-food deal only last week.

Crude prices have also been bolstered by strength in heating oil, pumped up by U.S. concerns of a potential Northeast region shortage heading into the winter months.