Violence continues in Iraq but it appears that traders are immune or bored with the Middle East problems. Up to 275 U.S. soldiers are being positioned in and around Iraq to protect the U.S. Embassy and other American interests as President Barack Obama weighs options for dealing with the al-Qaeda inspired militants who have captured a vast swath of the country’s north. The US ordered an evacuation of staff in Iraq.
Iraq’s crude oil exports have so far not been disrupted but the conflict raises concern about whether the country can rebuild its oil infrastructure and meet global demand. According to Dominick Chirichella, an Energy Department Institute analyst, he believes that oil prices will begin to decrease if the US was to get involved militarily. That said, at present, oil in Iraq appears to be getting exported according to schedule. For example, crude oil from Iraqi Kurdistan is moving normally.
The International Energy Agency, which acts as a consultancy to developed economies, said its members’ oil reserves were at a “comfortable level” and that the agency was ready to respond quickly to any supply disruptions caused by the turmoil in Iraq.
Crude oil is flat this morning at 105.89 off the high in the mid-106 range on Monday. Brent Oil eased by 29 cents to reach 113.08 after soaring most of the week.
As surprising as it might seem the IEA reported that the oil supply in Iraq has been immune from the violence. “At this moment, not a single barrel of oil has been displaced compared to a week ago,” IEA Executive Director Maria van der Hoeven said after the release of the agency’s medium-term oil market report. WTI crude eased on Tuesday while Brent prices gained as fears of oil supply disruptions from Iraq offset the possibility of increased supply due to a thawing of relations between Iran and the West. Scores of Iraqis were killed on Tuesday during a battle for the provincial capital of Baquba as an uprising by Sunni insurgents continued to threaten the disintegration of Iraq. The fighting also shut the country’s main oil refinery, starving parts of the country of fuel.
Later today the market gets the latest reading on U.S. supplies. Analysts expect oil supplies to have fallen 1.4 million barrels in the week ended June 13, according to a survey by Platts. The API released its weekly inventories report last night and US crude oil inventories fell by 5.7 million barrels for the week ending on 13th June 2014. Gasoline stocks declined by 0.48 million barrels whereas distillate inventories rose by 0.53 million barrels for the same time period.
The EIA is scheduled to release its weekly inventories report later today and US crude oil inventories is expected to decline by 0.7 million barrels for the week ending on 13th June 2014. Gasoline stocks are expected to decline by 0.1 million barrels whereas distillate inventories are expected to increase by 0.3 million barrels for the same time period