Oil prices up in Asian trade

INQUIRER FILE PHOTO

SINGAPORE – Oil prices rose in Asia Thursday following a surprisingly bullish US stockpiles report and on rising concerns that turmoil in Iraq will disrupt Middle East supplies.

US benchmark West Texas Intermediate for July delivery rose 23 cents to $104.63 while Brent crude for July gained 40 cents to $110.35 in mid-morning trade.

Singapore’s United Overseas Bank said prices are well-supported after the official US oil inventory report released Wednesday showed “a bigger than expected decline” in US stockpiles in the week to June 6.

The drop of 2.6 million barrels outstripped a 1.7 million forecast by analysts surveyed by Dow Jones Newswires, indicating robust demand in the world’s top crude consumer ahead of the busy summer driving season.

Tang Hsin Jin, premium client manager at CMC Markets in Singapore, said investors are also closely monitoring escalating violence in Iraq, a member of the OPEC oil cartel.

Rebels on Wednesday seized the Iraqi city of Tikrit as a jihadist offensive sweeps closer to Baghdad, prompting the UN Security Council to convene immediate crisis talks.

The US is said to be considering air strikes on the rebels.

The Islamic State of Iraq and the Levant seized the second city of Mosul on Tuesday and has since captured a large swathe of northern and north-central Iraq, prompting as many as half a million people to flee their homes.

Tang said there are fears the militants will “cause supply disruptions in the oil refinery town of Baiji”.

The town, 130 miles (209 kilometers) north of Baghdad, is home to Iraq’s biggest oil refinery.

Iraq is the second largest crude producer in the OPEC cartel after Saudi Arabia, pumping an average of about 3.5 million barrels a day according to the government.

It boasts the fifth largest proven crude oil reserves in the world.