News Column

China,Iraq : IRAQ'S crisis boosts CHINA'S oil futures

June 25, 2014

Crude-oil futures were supported in Asian trading hours as the situation in Iraq continues to deteriorate and after China posted strong manufacturing data.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $107.20 a barrel at 0533 GMT, up $0.37 in the Globex electronic session.

Iraqi insurgents captured more territory, overrunning two border crossings with Jordan and Syria and blocking the Baghdad government's access to its western frontier. French oil company, Total SA said it evacuated two of its expatriates from Baghdad.

The Brent-WTI spread widened across the entire forward curve for oil prices, suggesting the market is pricing in prolonged instability.

The Brent-WTI spread is currently around $7.90 a barrel.

In the short term a disruption of any size, would force Saudi Arabia to raise output to 3 decade highs and cut into its spare capacity.

China posted strong manufacturing data for June. The HSBC preliminary manufacturing purchasing managers index came in at a 7-month high of 50.8 compared with 49.4 in May.

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Source: TendersInfo (India)

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