Oil down in Asia on Iraq exports

OIL prices eased in Asia yesterday, ending a seven-day run, following news that Iraq will boost crude exports, while the dollar strengthened on speculation the Federal Reserve could hike interest rates this year. The commodity entered a bull market last week – after rising more than 20 percent from recent lows below US$40 a barrel – on hopes producers will take action to ease the supply glut.

But gains were chipped in Asia after Bloomberg reported that Iraq, OPEC’s second-biggest producer, will increase exports by 5pc after an agreement to resume shipments from three oil fields.

AUS benchmark West Texas Intermediate for delivery in September was down 97 cents, or 2pc, to $47.55 a barrel. Brent crude fell 98cents, or 1.93pc, to $49.90.

“Oil is buffeted by US dollar gains and news that Iraq plans to boost its exports, stoking fears that the supply glut will worsen,” said analyst Bernard Aw.

Both main contracts surged last week as it emerged that the OPEC producers club and its rivals will meet next month, with speculation they could discuss ways to tackle an oversupplied market.

However, despite the rally in oil prices analysts are doubtful a deal to freeze output would be reached.

“The stars remain misaligned for an OPEC/non-OPEC freeze agreement, but it is beneficial for producers to talk,” British bank Barclays said in a market analysis.

“Oil prices will likely experience another short-term dip in the coming weeks before more sustainably moving to average $50” in the fourth quarter. –