Oil prices withstand Baghdad bombing
Global oil prices slipped on Tuesday as traders withstood the shock of a massive Baghdad truck bomb and focussed instead on an expected increase in US crude oil inventories.
New York’s benchmark light sweet crude contract for September delivery fell 19 cents to 30.70 dollars a barrel.
In London, Brent North Sea crude oil for October delivery dropped 19 cents to 28.47 dollars.
Concerns over Iraqi security were heightened when a truck bomb tore through the United Nations headquarters in Baghdad, killing at least 17 people including the top UN envoy to Iraq, Sergio Vieira de Mello.
Rapid recovery
But traders rapidly recovered their composure and focussed instead on Wednesday’s weekly snapshot of the level of US commercial crude oil inventories.
“The market expects a sizeable build (increase in inventories) in crude after last week’s blackout,” said a New York market analyst Mike Fitzpatrick, referring to the power cut that affected 50 million people in the United States and Canada.
Iraq oil would return to world markets sooner or later, he forecast.
“We have the most powerful nation in charge, they are going to apply all it takes to get the oil back,” Fitzpatrick said.
Weak gasoline prices, which had declined as the summer vacation car-driving season drew to a close, also dragged down the overall market, said another analyst Marshall Steeves.
The Baghdad bomb had no immediate impact on supplies, he said.
“This particular bombing doesn’t affect the operations, unlike those targeting pipelines,” he said.
Last Friday, a presumed sabotage attack on northern Iraq’s main oil pipeline to Turkey shut off exports via that route for up to four weeks.
“I think with the sabotage of the pipeline over the weekend, the market has already taken into account the situation in Iraq.” Tony Machacek, an analyst in London. |
The harnessing of Iraq’s vast oil reserves is central to plans by US-led authorities in Baghdad to pay for the rebuilding of the country’s shattered economy and infrastructure.
However, work to increase oil production and exports has been hampered by sabotage.
“I think with the sabotage of the pipeline over the weekend, the market has already taken into account the situation in Iraq,” said a London analyst Tony Machacek.
But the pipeline attacks pointed to a difficult future for the country’s oil industry, he said.
“It suggests that there is going to be more and more opposition, especially to the exports. They seem to be targeting the pipelines and sabotaging any chances of exporting oil at the moment,” he said.