Oil price falls after Iraq exports rise to near record in April
Oil price declined a second day after Iraq’s oil exports approached a record high in April, adding barrels to a worldwide oversupply.
Futures declined as much as 0.8% in New York after dropping 0.2% Friday. According to an oil ministry spokesman, Iraq shipped 3.36 million barrels per day (bpd) last month, excluding the sales from the Kurdistan Regional Government. Even after protesters stormed the parliament in Baghdad on Sunday, threatening to paralyze the government of OPEC’s second-largest producer, operations were still not affected.
According to energy industry consultant FGE, oil has rebounded after slumping this year to the lowest since 2003 as US production has slipped below 9 million bpd. Disruptions ranging from pipeline attacks to field shutdowns removed as much as 800,000 bpd of supply this year.
Hong Sung Ki, a commodities analyst at Samsung Futures Inc. said that the lower output was one of the biggest bullish factors they faced in the first quarter, but as it was something they cannot sustain, the upward momentum in oil prices will slow. If they see more signs of easing production disruptions, this can have a strong downward pressure.
West Texas Intermediate for June delivery lost as much as US$0.37 to US$45.55 a barrel on the New York Mercantile Exchange and was at US$45.61. The contract fell US$0.11 to $45.92 on Friday. Total volume traded was about 52% below the 100-day average.
Brent for July settlement dropped as much as US$0.42, or 0.9%, to US$46.95 a barrel on the London-based ICE Futures Europe exchange. The June contract closed down US$0.01 to expire Friday at $48.13 a barrel. The global benchmark was trading at a US$0.68 premium to WTI for July.
Iraq’s exports rose from March’s 3.29 million bpd and neared the record 3.365 million in November. The country declared a state of emergency in Baghdad after supporters of Shiite Muslim cleric Moqtada al-Sadr stormed parliament. According to a report citing a statement issued by the protests’ committee, protesters, who also breached Baghdad’s fortified Green Zone, agreed to leave the secure zone.
Data compiled by Bloomberg show that the country produced 4.31 million bpd in April and drilling has increased as companies, including BP Plc and Lukoil PJSC, boost production at fields they operate in the south of the country. OPEC increased production by 484,000 barrels to 33.217 million bpd in April, the most in monthly data compiled by Bloomberg going back to 1989, according to a survey of oil companies, producers and analysts.
Source: Bloomberg