Oil prices mixed on profit taking following price rally
Oil prices were mixed in trading on Friday despite threats from Turkey and Iran to cut off Kurdish oil production to global markets. TheKurdishProject.org photo.
Oil prices on track for weekly gains
Oil prices were mixed in trading on Friday, mostly due to profit taking in the wake of a price rally spurred by geopolitical instability in Iraqi Kurdistan.
By 1:24 p.m. EDT, US WTI was up by 4 cents to $51.60/barrel, and is on track for its strongest third quarter in 10 years and longest positive streak since January. US crude rose 1.6 per cent on the week.
Benchmark Brent dipped 40 cents to $56.76/barrel. Brent registered a third-quarter gain of about 20 per cent and on the week, was up 0.9 per cent.
“We’ve seen a strong rally in the past month on the expectation that we are seeing strong demand,” Gene McGillian, manager of market research at Tradition Energy told Reuters. He added “With the geopolitical risk in Kurdistan, Brent pushed to a two-year high. I think the market rally is looking to be a little overdone.”
On Monday, Kurdistan residents overwhelmingly voted to secede from Iraq by a nine to one margin. The Iraq central government, Turkey and other global powers unhappy with the vote fear it could lead to renewed conflict in the oil-rich region.
The President of Turkey, Tayyip Erdogan has called the vote illegitimate and has threatened to to deal with only the Baghdad government concerning oil exports from Iran. That could cut off Kurdistan’s pipeline access to Turkish ports, stranding the region’s 500,000-600,000 barrels of oil produced per day.
Currently, oil continues to flow through the pipeline.
Iran’s semi-official news agency Tasnim reported on Friday that Iran has banned transportation of oil products by Iranian companies to and from the Kurdistan region.
Such bans will likely severely damage the Kurdish Regional Government which relies on crude sales for almost all of its hard-currency revenues.
The US rig count rose last week. Baker Hughes data released on Friday shows the US oil rig count rose last week by six and now sits at 750 while the number of gas rigs was down by one to 189. In Canada, the oil rig count was down by nine to 113 and the number of gas rigs was up by two to 100.
This time last year, there were 418 oil and gas rigs operating in the United States and 162 oil and gas rigs in Canada.
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