News Column

Crude Oil Surges as Fighting Rages in Iraq

June 12, 2014

Alliance News

Oil well (file photo)
Oil well (file photo)

WASHINGTON (Alliance News) - US crude oil soared to end at a near nine-month high on Thursday, on supply concerns after militants in Iraq overran two major cities with fear of more such attacks possible. Investors also weighed the US crude oil inventories scenario, after a weekly report from the Energy Information Administration showed crude stockpiles in the US to have declined more than expected.

Crude oil prices soared amid escalating violence in Iraq, where militants are reportedly surging toward Baghdad. The al-Qaeda affiliated militants attacked and took control of two key cities -- Mosul and Tikrit earlier in the week, with reports the fighters are heading toward Baghdad.

Meanwhile, NBC News reported that the Government of Iraq has asked the US for air assistance in quelling the uprising by al-Qaeda affiliated militants.

Reports say militants linked to the jihadist Islamic State of Iraq and Syria had crossed over from the unmanned long border with Syria to take control of Iraq's second largest city of Mosul on Tuesday and have since driven away government forces from the Tikrit, Saddam Hussein's birth place. The militants are reported have taken part control of Baiji, an oil refining center, and moving towards a major Shia town close to Baghdad.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, surged USD2.13 or 2.0% to close at USD106.53 a barrel on the New York Mercantile Exchange Thursday.

Crude prices for July delivery scaled a high of USD106.56 a barrel intraday and a low of USD104.35.

On Wednesday, the US Energy Information Administration's weekly petroleum status report showed US commercial crude inventories to have decreased by 2.6 million barrels last week, maintaining a total US commercial crude inventory to 386.9 million barrels, and in the upper half of the five-year range for this time of the year.

The dollar index, which tracks the US unit against six major currencies, traded at 80.60 on Friday, down from its previous close of 80.77 late Wednesday in North American trade. The dollar scaled a high of 80.82 intraday and a low of 80.57.

The euro traded higher against the dollar at USD1.3561 on Thursday, as compared to its previous close of USD1.3532 late Wednesday in North American trade. The euro scaled a high of USD1.3565 intraday and a low of USD1.3512.

In economic news, US retail sales rose less than expected in May. The Commerce Department said on Thursday retail sales gained 0.3% last month. Retail sales rose by a revised 0.5% in April.

First-time claims for US unemployment benefits unexpectedly increased in the week ended June 7, a Labor Department report said Thursday. Initial jobless claims edged up to 317,000, an increase of 4,000 from the previous week's revised level of 313,000. Economists expected jobless claims to dip to 310,000 from the 312,000 originally reported for the previous week.

Business inventories in the US increased by more than anticipated in April, with inventories rising 0.6% in April following a 0.4% increase in March. Economists expected inventories to match the growth seen in the previous month.

Meanwhile, import and export prices in the US showed modest increases in May, as import prices inched up 0.1% in May after falling by a revised 0.5% in April. Import prices were expected to edge up by 0.2%. Export prices ticked up 0.1% in May following a 1.0% drop in the previous month. Economists expected export prices to rise by 0.2%.

From the Europe, euro area industrial production rose a seasonally adjusted 0.8% from March, when it fell 0.4%, which was downwardly revised from a 0.3% decline. The monthly growth in April was the strongest since November last year, when output rose 1.4%. Economists had forecast a 0.5% increase for April.


Original headline: Crude Oil Surges Above USD106; Ends At Near 9-Month High On Iraq

Source: Copyright RTT News/dpa-AFX

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