Oil prices were poised for a third day of gains following a rise of more than 4% last week after Islamic militants seized much of northern Iraq as Baghdad’s forces there collapsed.
“The oil market remains in high alert, but is in a holding pattern at this stage awaiting further developments in Iraq,” CMC Markets chief strategist Michael McCarthy told Reuters.
Brent crude gained $0.21 at $114.47 per barrel at Thursday morning, after ending $0.81 higher at $114.26 per barrel, its highest settlement since 9 September last year.
US crude for July delivery rose $0.44 to $106.41 per barrel. The contract, which expires Friday, settled $0.39 lower in the previous session.
“While US crude remains above $105.25 and Brent remains above $110.50, technically the risks remain to the upside for both contracts,” McCarthy said.
Oil prices found support after the US Federal Reserve gave a positive assessment of the country’s economy and committed to retaining accommodative monetary policy.
However, US crude eased on Wednesday after data from the US Energy Information Administration showed domestic crude inventories declined 579,000 barrels in the week ending 13 June, much less than the drawdown of 5.7 million barrels reported by industry group American Petroleum Institute.
A Reuters poll of analysts had forecast a drawdown of 700,000-barrels.
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% 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 US general said on Wednesday, after the militants had seized major cities in a lightning advance.
But General Martin Dempsey, chairman of the US 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 US 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.