13 June 2014, News Wires – Brent futures rose towards $114 per barrel on Friday and hit a nine-month high, as supply disruption fears took centre stage with the US threatening military action in Iraq as Sunni Islamist militants push on towards Baghdad.
The jihadists extended their lightning advance to towns only about an hour’s drive from Baghdad while trucks carrying Shi’ite volunteers in uniform rumbled towards the front lines to defend the city, stoking concerns of prolonged unrest and bloodbath.
Brent rose $0.36 cents to $113.38 per barrel by Friday morning, after earlier hitting $113.7.
It ended up with gains of more than $3 on Thursday.
US crude touched an intraday high of $107.68, also a nine-month top, and was up $0.39 at $106.92, extending the previous session’s $2.13 gain.
“There have been no disruptions to oil supplies so far but people are very nervous,” Newedge Japan commodity sales manager Ken Hasegawa told Reuters, referring to worries that escalating violence in Iraq could disrupt oil supplies from the second-largest OPEC producer.
The forces of Iraq’s autonomous ethnic Kurdish north have taken control of the oil hub of Kirkuk as the troops of the Shi’ite-led government abandoned posts.
“Oil is now in a new price territory and is likely to climb more as investors rework their positions, supported by the uncertainty and technicals.”
Given the break past key resistance at $105 per barrel, the US benchmark may rise towards $112 over the next two weeks, the high touched last year, if it manages to break past the next ceiling of $110, Hasegawa reportedly said.
Brent may gain towards $115 over the same time period now that it has broken past $110, he said.
Yet, producer group OPEC’s latest forecast of the oil market being balanced in the second half of this year with extra production sufficient to meet growing demand, helped allay some concerns of disruption in supplies.
The cartel of 12 exporters said global oil inventories were comfortable. US stockpiles were high and commercial stocks in the large developed economies were sufficient at the end of April to meet almost two months of consumption.
The unfolding geopolitical crisis overshadowed data out of the US that showed retail sales rose less than expected in May and first-time applications for jobless benefits increased last week.
Investors are awaiting industrial output data from China due later in the day to gauge the demand outlook for the world’s second-largest oil consumer.