Oil prices slid Monday as Iraqi and Kurdish forces made gains against Islamic insurgents, reducing investor concerns about threats to Iraq's oil production and exports.Iraqi and Kurdish forces recaptured the core of a critical dam on Monday, WSJ reports.
Militants had seized the dam Aug. 7. Oil prices jumped to nine-month highs in June when Sunni insurgents first captured cities in northern Iraq, as traders worried that the insurgents could spread to the south of Iraq, where the country's oil production and exports are based. The current campaign is the latest indication to market watchers that Iraq's oil output isn't in immediate risk.
"The Iraq situation, although very troubling, has not resulted in any real disruption of oil coming out of the fields there," said Richard Soultanian, co-president of NUS Consulting Group.
Light, sweet crude for September delivery fell 94 cents, or 1%, to $96.41 a barrel on the New York Mercantile Exchange. Brent on ICE Futures Europe fell $1.93, or 1.9%, to $101.60 a barrel, the lowest price since June 25, 2013.
Global supplies remain ample, and market participants are now worried that demand is too low to keep up with supplies. Libya's production jumped to 550,000 barrels a day, up from 400,000 barrels a day last week, according to the state-owned National Oil Co.
"There's tremendous, tremendous supply out there, and that has continued driving us lower," said Anthony Lerner, senior vice president of industrial commodities at brokerage RJ O'Brian in New York.
The weighted average price of 12 grades of crude oil produced by members of the Organization of the Petroleum Exporting Countries fell below $100 a barrel for the first time since June 2013, the group said Monday.
The OPEC basket, which fell to $99.94 a barrel Friday, is calculated from reporting selling prices of oil from Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
"We…feel that the approach of the $100 mark in Brent will be closely followed by some statements out of Saudi Arabia regarding [plans] to cut production," said energy-advisory firm Ritterbusch & Associates in a note Monday afternoon.
Front-month September reformulated gasoline blendstock, or RBOB, slid 4.26 cents, or 1.6%, to $2.6560 a gallon, the lowest price since Feb. 5. September diesel fell 4.20 cents, or 1.5%, to $2.8060 a gallon, the lowest settlement since May 31, 2013.