Oil pulls back below $107 after leap on Iraq blast - Emirates24|7

Oil pulls back below $107 after leap on Iraq blast

 

Oil fell below $107 (Dh392.70) a barrel on Friday as traders wary over the US economic outlook took profits from a three-day rally, setting aside for the moment a major oil pipeline explosion in Iraq.

 

US crude dropped by 70 cents or 0.65 per cent to $106.88 a barrel by 0233 GMT, paring a gain of $1.68 in New York on Thursday after saboteurs blew up a pipeline in southern Iraq, cutting exports by 300,000 barrels per day (bpd).

 

But prices are still up 5 per cent on the week, near their mid-March record high of $111.80 (Dh410.31) amid a broad fund-led rally in commodities markets aided by the weak US dollar, plus news of an unexpectedly deep decline in weekly US fuel stocks.

 

"People are taking a wait-and-see approach on Iraq and have moved onto profit taking, as demand is at its lowest during the second quarter. There are concerns over the US economy," said Robert Nunan of Mitsubishi Corp in Tokyo.

 

A shipping source at Iraq's Basra export terminal said the pipeline attack cut flows on the line to around 1.2 million barrels per day, down 300,000 bpd from average levels.

 

Analysts said the attack – the first disruption to shipments from Iraq's south since 2004 – could prompt traders to attach a bigger "fear premium" to prices, as it raised the risk to previously stable supplies.

 

But economic troubles in the US weighed on oil prices.

 

The US economy could be slipping into recession, said Dennis Lockhart, president of the Atlanta Fed on Thursday, after government data confirmed anaemic growth in the fourth quarter, which analysts say has since slowed further.

 

Boston Fed President Eric Rosengren told reporters in Seoul on Friday the current period of slow growth would likely lead to an increase in unemployment.

 

Thursday's crude oil gains were led by heating oil which surged by more than 3 per cent, underpinned in part by news of a brief outage at South Korea's S-Oil refinery, which forced it to cancel diesel supply contracts for April.

 

April heating oil retraced gains on Friday, falling by 1.93 cents to $3.1290 a gallon by 0228 GMT.

 

In the United States, where refiners last week slowed operations to their slowest pace since 2005, some plants were beginning to return from maintenance ahead of the summer.

 

ConocoPhillips plans to restart its 44,000 bpd Santa Maria refinery in Arroyo Grande, California, on Thursday after a power failure shut the plant.

 

Valero Energy Corp was restarting several units, including the coker and the hydrocracker, at its 230,000 bpd refinery in Port Arthur, Texas, after a brief power outage. (Reuters)

 
 
 
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