Crude gains as traders mull Iraq turbulence, potential supply shock

Getty Images

Crude oil climbed on Thursday, rebounding from the lowest prices in months as the security situation in northern Iraq deteriorated, raising concerns of supply disruptions.

Brent and U.S. crude contracts rallied, after reports that U.S. President Barack Obama was considering airstrikes on Islamic militants in OPEC's No. 2 oil producer. Earlier, two car bombs killed nine people in the Kurdish-held Iraqi oil city of Kirkuk, police and medical sources said.

"Obama's statements helped move the markets, but we need to see that actually happen before oil prices can go up higher," said Gene McGillian an analyst at Tradition Energy in Stamford, Connecticut. He said ample global supplies were still pressuring oil prices, and noted there were no disruptions in Iraq yet.

Brent crude rose 70 cents to over $105 a barrel. It had settled at $104.59 a barrel on Wednesday, its lowest finish since Nov. 7. U.S. crude rose 42 cents to settle at $97.34 a barrel, coming off its weakest since February.

In mid-June, Brent and U.S. crude hit nine-month highs on worries about the Sunni insurgency. But oil prices have fallen more than $10 a barrel over the past six weeks despite the continued unrest, as traders and investors shifted their attention to weak U.S. and global economic fundamentals.

Meanwhile, refining issues in the United States, including the four-week shut-down of a refinery in Coffeyville, Kansas, are weighing on U.S. crude, ahead of the refinery turnaround season in autumn, characterized by typically weaker demand.

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