OIL PRICES TO RISE
With US oil markets closed for Independence Day, crude futures in Europe and Asia also took support from uncertainty about whether or not Opec would carry out a planned production increase of 500,000 barrels per day (bpd) from August.
Brent crude on London’s International Petroleum Exchange was up 73 cents to $36.65 a barrel, erasing Friday’s 15-cent loss. On the Tokyo Commodity Exchange, December crude, was up 440 yen at 22,320 yen a kilolitre (up about 60 cents to $32.60 a barrel).
Exports from Iraq’s southern terminals fell to 960,000 barrels per day (bpd) on Saturday after saboteurs blew a hole in one of two feeder pipelines.
Iraqi exports were further cut on Sunday by an attack on a north-south pipeline through which northern exports were being diverted south. Northern crude is usually pumped through a pipeline to Turkey, but earlier sabotage caused the diversion.
“There’s an underlying fear that Iraq pipelines will blow up and exports will halt,” Tony Nunan, manager of Mitsubishi’s petroleum trading business in Tokyo said, adding that the market saw much upside potential on fears of a supply shortage.
Iraq used to export around two million bpd of crude - all through the south - before the latest attacks.
“People are starting to realise that all it takes is for the Saudi oil minister to change policy for the market to change direction,” Nunan added, referring to hints from Saudi Arabia’s oil minister Ali al-Naimi last Wednesday that Opec’s top producer might choose not to increase output in August as earlier agreed because the kingdom was happy with current prices.
But as ample supplies have pushed prompt values to fall below forward prices, into what traders call a contango, Naimi’s remarks could see the Opec kingpin ditch plans to raise formal output limits, analysts said.
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