Oil prices fell on Monday, with Brent crude dropping below $113 a barrel as investors grew less jittery about global supplies after Iraq government forces launched a pushback against a Sunni militant insurgency.
The North Sea oil benchmark is still up about 3 percent this month, its strongest monthly showing since August. But Brent has come off the nine-month high hit two weeks ago, when it surged above $115.
"The fear premium is abating as the chances of fighting in Iraq hitting oil supplies diminishes," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
"It now looks very unlikely that the rebels will reach the major oil supply areas."
The Iraqi army sent tanks and armoured vehicles to dislodge insurgents from the northern city of Tikrit. Heavy fighting in the north of Iraq has had little impact on the southern refineries that produce around 90 percent of the country's oil shipments.
Brentfell 84 cents to $112.46 a barrel by 11:21 a.m. EDT (15:21 GMT) after a 1.3 percent decline last week. U.S. crude declined 47 cents to $105.27 a barrel, after sliding nearly 1.4 percent in the past week.
On Friday, U.S. Secretary of State John Kerry and Saudi King Abdullah discussed global oil supplies during a meeting about the crisis in Iraq, a U.S. official said.
During the talks, Kerry referred to recent comments by a Saudi oil official that the world's largest oil producer would increase supplies if there was a disruption due to crises in Iraq or Syria.
The reopening of a port in Libya and an easing of tensions over the Ukraine crisis also weighed on oil.
Although violence in Iraq remains contained, the fear factor is going to hold oil prices above $105 for U.S. crude and $110 for Brent, analysts said.
"We'll be well supported as long as there are issues in Iraq and Russia," said Carl Larry, CEO of consultancy Oil Outlooks in Houston, Texas.
Economic data due this week will help investors gauge the outlook for the global economy and oil demand. Data due this week include U.S. June auto sales figures on Tuesday and U.S. June payrolls on Thursday, a day early due to the Fourth of July holiday.
Economists polled by Reuters expect U.S. jobs to increase 213,000 in June for a fifth straight month of gains above 200,000.
Source: Reuters
The North Sea oil benchmark is still up about 3 percent this month, its strongest monthly showing since August. But Brent has come off the nine-month high hit two weeks ago, when it surged above $115.
"The fear premium is abating as the chances of fighting in Iraq hitting oil supplies diminishes," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
"It now looks very unlikely that the rebels will reach the major oil supply areas."
The Iraqi army sent tanks and armoured vehicles to dislodge insurgents from the northern city of Tikrit. Heavy fighting in the north of Iraq has had little impact on the southern refineries that produce around 90 percent of the country's oil shipments.
Brent
On Friday, U.S. Secretary of State John Kerry and Saudi King Abdullah discussed global oil supplies during a meeting about the crisis in Iraq, a U.S. official said.
During the talks, Kerry referred to recent comments by a Saudi oil official that the world's largest oil producer would increase supplies if there was a disruption due to crises in Iraq or Syria.
The reopening of a port in Libya and an easing of tensions over the Ukraine crisis also weighed on oil.
Although violence in Iraq remains contained, the fear factor is going to hold oil prices above $105 for U.S. crude and $110 for Brent, analysts said.
"We'll be well supported as long as there are issues in Iraq and Russia," said Carl Larry, CEO of consultancy Oil Outlooks in Houston, Texas.
Economic data due this week will help investors gauge the outlook for the global economy and oil demand. Data due this week include U.S. June auto sales figures on Tuesday and U.S. June payrolls on Thursday, a day early due to the Fourth of July holiday.
Economists polled by Reuters expect U.S. jobs to increase 213,000 in June for a fifth straight month of gains above 200,000.
