Oil prices eased for a second session yesterday as Iraq resumed exports from both its northern and southern outlets after lengthy disruption, despite fierce fighting in the holy city of Najaf.
US light crude for October, the new benchmark, fell 67 cents to end at $46.05 (€37.71) a barrel. The expiring September contract lost 84 cents on Friday as traders took profits from a record run that took prices within 60 cents of the $50 mark.
Brent crude in London settled down 51 cents at $43.03 a barrel. Before yesterday, US prices set record peaks in all but one of the previous 16 sessions.
Prices slipped as Iraq restarted a pipeline from its northern fields after a three-month halt and resumed full exports through its southern terminals for the first time in two weeks.
Iraq resumed pumping crude oil along its northern Kirkuk pipeline to the Turkish Mediterranean port of Ceyhan at around 450,000 bpd, just over half normal capacity. Iraq last sold oil pumped through from Kirkuk in late May.
Authorities also reopened the main export pipeline in southern Iraq yesterday after deploying US-backed Iraqi National Guardsmen to protect oil facilities in the region.
Flows from southern Gulf terminals were restored to normal levels of around two million bpd after exports had been running at around half normal levels since August 9th, following sabotage.
Reduced flows from Iraq and concern that the financial turmoil at Russia's top producer could ultimately disrupt supplies have helped drive up oil prices $10 since the end of June. Rapid demand growth has left world oil supplies with little spare capacity to make up for disruption.
"In the event of a significant supply disruption, prices could remain above $50 for WTI in September," Cambridge Energy Research Associate's Mr James Burkhard said in a report. "If instead, the prospect of a supply disruption from Russia recedes and Iraqi exports via Basra stabilise near capacity price momentum could quickly shift downward toward $40."
CERA forecasts the US benchmark WTI crude to average $47 in September.
There is little sign that oil's rally is slowing the fuel demand that is fed by global economic growth. OPEC producers are pumping at the highest level in a quarter of a century to take advantage of high prices.
Iran's deputy oil minister said OPEC could do no more to control the price rise. "There is no extra capacity. Those that consume oil, they should decrease demand, that is the only solution. I think prices will remain around $50 a barrel," said Mr Mohammad Hadi Nejad Hosseinian.
OPEC ministers meet on September 15th.
Mr Robert McTeer, president of the US Federal Reserve Bank of Dallas, said yesterday that record high oil prices are creating headwinds for the US economy but did not place its recovery at risk. "Petroleum products are in many, many things, and it is very important and it is troublesome, both in adding to the price pressures and in adding to weakness overall," he said. - (Reuters)
