Brent Falls on Iraqi Pledge; WTI Steady After U.S. Export Ruling

Brent crude fell for the third time in four days as Iraq pledged to increase output and exports. West Texas Intermediate traded near $106 a barrel amid speculation that an Obama administration ruling on U.S. fuel exports will have a limited impact on markets.

Iraqi production has been unaffected by fighting with militants and the country plans to increase crude exports next month from about 2.5 million barrels a day in June, Oil Minister Abdul Kareem al-Luaibi said in an interview in Baghdad. The U.S. Commerce Department granted Pioneer Natural Resources Co.’s request to classify stabilized condensates as fuel eligible for export, the company said. WTI surged as much as 1.4 percent before retreating.

“The geopolitical situation isn’t improving but the Iraqis are continuing to pump oil and say they intend to increase shipments,” said Phil Flynn, senior market analyst at the Price Futures Group inChicago. “WTI is showing some strength on the potential for exports of U.S. oil. This could bring the spread in a bit.”

Brent for August settlement declined 99 cents, or 0.9 percent, to $113.47 a barrel on the London-based ICE Futures Europe exchange at 9:27 a.m. New York time. The volume of all futures traded was 44 percent higher than the 100-day average. Brent has climbed 2.4 percent this year.

WTI for August delivery rose 3 cents to $106.06 a barrel on the New York Mercantile Exchange. Trading volume was 61 percent above the 100-day average. Prices have increased 7.8 percent this year.

The U.S. benchmark crude traded at a $7.41 discount to Brent, down from $8.43 yesterday.

The first American military advisers have begun to assess the conflict in Iraq. A small contingent of U.S. forces has begun operating to gather intelligence and establish an operations center in Baghdad, the Defense Department said yesterday. Insurgents captured the northern city of Mosul this month and have advanced to towns just north of the capital, threatening to split OPEC’s second-largest oil producer.

The U.S. Commerce Department opened the door to more U.S. oil exports as long as the crude is lightly processed, tempering the impact of a law that’s banned most overseas petroleum shipments for the past four decades. The oil industry has pressured President Barack Obama to end the 41-year-old ban on most crude exports.

Source: Bloomberg