Peaceful agreement will calm the oil market
Oil prices stopped a five-day slide on Friday on renewed supply concerns after fresh Iraqi pipeline attacks outweighed an end to a three-week uprising in the city of Najaf. U.S. crude inched 8 cents higher to $43.18 a barrel. London's Brent crude settled 31 cents stronger at $40.64 a barrel. Despite Friday's tiny rise, prices are down 13 percent from last week's peak, when speculators began taking profits after prices failed to breach $50. Crude prices are still up nearly 40 percent since the turn of the year on strong global demand and uncertainty in the Middle East. The reliability of Iraq's crude exports remained shaky after renewed sabotage attacks on the country's oil infrastructure on Thursday and Friday. Saboteurs attacked two pipelines linking a main oil field to export storage tanks in the south of the country, informs Reuter. Exports from the southern terminal were running at 1.5 million barrels a day, down from 2 million bpd earlier in the week, although it was unclear whether the fall was a result of the sabotage attacks or a normal fluctuation in flow rates, shipping agents said. According to Herald Sun, world oil prices firmed overnight after a five-session drop amid renewed concerns over unrest in Iraq despite a ceasefire in its holy city of Najaf. New York's main contract, light sweet crude for October delivery, rose eight cents to $US43.18 a barrel in closing trade. The price of London's benchmark Brent North Sea crude oil for delivery in October advanced 31 cents to $US40.64 per barrel. Prices remained far short of the all-time high of $US49.40 reached in New York trading a week ago. Analyst John Kilduff at Fimat said reports about sabotage in Iraq kept the market on edge about the prospect of increasing supples from the country. But he said the rise was modest and the truce in Najaf could mean further declines. Prices "would have been lower except for the fact that it's the weekend, and there are worries about the (Republican National) Convention and potential terrorism" linked to the gathering in New York. Analysts said the end of the fighting in Najaf under a ceasefire brokered by Grand Ayatollah Ali al-Sistani was likely to calm the oil market if it held. Newsday published that falling crude oil prices this week suggest that Americans might dodge the surge in gasoline prices that experts had predicted for the weeks leading up to the Labor Day weekend. The most closely watched grade of crude oil fell in price yesterday for the fifth trading day in a row, closing at $43.10 a barrel on the New York Mercantile Exchange, and just above $40 in Europe. Gasoline futures declined as well, to a two-month low. Experts credit a confluence of factors that are good news for oil consumers. They include: Political stability in Venezuela, a decline in tensions between the Russian government and its largest oil producer, Yukos, and the cease-fire in Najaf, Iraq, all of which have reduced concerns of disruptions in shipments from those nations. Analysts don't consider the pipeline sabotage reported yesterday near Basra, Iraq, as a major threat. High gasoline prices and cool and rainy weather in parts of the nation this summer, both of which reduced driving. Demand, while outstripping last summer's, did not increase as much as many experts had feared. U.S. government reports Wednesday showing stronger than expected supplies of gasoline and heating oil. Experts say that refiners in the United States and abroad ran full tilt in response to high gasoline prices and profits early in the summer. "The old adage that high prices are the best thing for high prices really played out," said John Kilduff, senior vice president for energy risk management at the brokerage Fimat USA Inc. in Manhattan.
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