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Oil rises on Iraq turmoil, US inventory drop

Drilling in the Bakken shale formation outside Watford City, N.D.
Getty Images
Drilling in the Bakken shale formation outside Watford City, N.D.

Brent oil futures rose toward $110 a barrel on Wednesday as violence in Iraq prompted worries about the supply outlook, while U.S. crude struggled to make gains near key levels of resistance.

Militants from an al Qaeda splinter group who seized Iraq's second-biggest city, Mosul, earlier this week have advanced into the oil refinery town of Baiji, raising concerns about oil supply interruptions should other regions of the country fall.

However, U.S. crude was little changed, initially finding support from a weekly government report showing a fall in crude oil and gasoline stocks despite high production, with prices rising toward highs for the year before trailing lower

The Department of Energy's Energy Information Administration (EIA) reported that crude stocks tumbled by 2.59 million barrels in the latest week, while gasoline stocks rose by 1.7 million barrels. Those figures were the exact opposite of data from the American Petroleum Institute, which showed on Tuesday that gasoline stocks falling by 441,000 barrels, compared with expectations for a 843,000-barrels gain. The API data reported a rise in crude stocks by 1.45 million barrels.

Brent futures added 40 cents to trade shy of $110 a barrel, after shedding 0.4 percent in the previous session. U.S. oil ended 5 cents higher at $104.40. It rose to an intraday high of $105.06 in the previous session, inching close to the high for the year at $105.22, touched in early March.

Key resistance levels around $105 a barrel for U.S. crude and $110 for Brent capped gains, traders said.

OPEC, which pumps more than a third of the world's oil, agreed on Wednesday to renew for the second half of 2014 its oil production ceiling of 30 million barrels a day in a widely anticipated decision.


--By Reuters. For more information on commodities prices, please click here.

Symbol
Price
 
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BRENT
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OIL
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