Brent Above $114 Near 9 - Month High on Iraq Turmoil

Bareksa.com - Brent crude held above $114 a barrel on Thursday near a nine-month high, supported by concerns about potential supply disruptions due to fighting in Iraq.

Brent was poised for a third day of gains following a rise of more than 4 percent last week after Islamic militants seized much of northern Iraq after routing Baghdad's forces.

"The oil market remains on high alert, but is in a holding pattern at this stage awaiting further developments in Iraq," said Michael McCarthy, chief strategist at CMC Markets in Sydney.

Brent crude was up 41 cents at $114.67 a barrel at 0706 GMT, after ending 81 cents higher at $114.26 a barrel, its highest settlement since Sept. 6 last year.

U.S. crude for July delivery rose 51 cents to $106.48 a barrel. The contract, which expires Friday, settled 39 cents lower in the previous session.

"While U.S. crude remains above $105.25 and Brent remains above $110.50, technically the risks remain to the upside for both contracts," said McCarthy.

Oil prices found support after the U.S. Federal Reserve gave a positive assessment of the country's economy and committed to retaining accommodative monetary policy.

However, U.S. crude eased on Wednesday after data from the U.S. Energy Information Administration (EIA) showed domestic crude inventories declined 579,000 barrels in the week ending June 13, much less than the drawdown of 5.7 million barrels reported by industry group American Petroleum Institute (API).

A Reuters poll of analysts had forecast a drawdown of 700,000-barrels.

Crude stocks at Cushing, Oklahoma rose by 247,000 barrels - the first rise at the oil storage hub after nine weeks of consecutive drawdowns.

"This build is consistent with our long-held view that the incentive to move barrels from Cushing to the Gulf Coast would eventually diminish," said analysts at BNP Paribas in a note.

"But this latest build could initiate a sell-off on West Texas Intermediate, especially given the recent price outperformance related to events in Iraq," they said.

IRAQ ASKS FOR AIR SUPPORT

Concerns arose over Iraq's ability to increase oil production or even maintain current levels, after the head of state-run South Oil Company Dhiya Jaffar said Exxon Mobil has carried out a "major evacuation" of their staff and BP had evacuated 20 percent of its staff.

Sunni militants have already taken control of most of Iraq's largest oil refinery, located in Baiji in northern Iraq, an official at the refinery said on Wednesday.

Iraq has asked the United States for air support in countering the Sunni rebels, a top U.S. general said on Wednesday, after the militants had seized major cities in a lightning advance.

But General Martin Dempsey, chairman of the U.S. military's Joint Chiefs of Staff, gave no direct reply when asked at a congressional hearing whether Washington would agree to the request.

President Barack Obama came under pressure from U.S. lawmakers on Wednesday to persuade Iraqi Prime Minister al-Maliki to step down over what they see as failed leadership in the face of an insurgency threatening his country. (Source : Reuters)