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Oil Prices Dip On Iraqi Loading Of Export Crude
by Marie Wolfrom
LONDON (AFP) - Oil prices eased on Wednesday as Iraq allowed a tanker to load up with crude for the first time in 12 days, suggesting that Baghdad was about to lift an export embargo and send its crude back to world oil markets.
But the downward movement was limited by a sharp fall in U.S. crude reserves, which gently revived concerns over available supply on the market.
A barrel of Brent North Sea reference crude for earliest delivery in January fell below $27 to $26.94 from $27.06 overnight on Tuesday.
In New York however, prices remained well supported by the drawdown in U.S. crude stocks, and the January light sweet crude contract held firm at $29.75.
"The two items that have impacted the market are the weekly announcement of the stock data in the United States, which showed quite a large drawdown in crude and distillate stocks ... and the announcement that Iraq are exporting crude again," said Royal Bank of Scotland analyst Andrew Hartree.
Dealers said that the initial downward pressure on prices had been prompted by news that Iraq had started loading oil ready for export at its Mina al-Bakr port. U.N. sources later said that an Indian oil tanker had indeed begun loading crude at the port.
"We saw headlines about Iraqi loading at Mina al-Bakr," said Jim Chilcott, a trader with the GNI brokerage. The oil price eased on the news, he said, but "it's just drifting, it hasn't come down aggressively at all."
Prudential Bache analyst Tony Machacek said: "It looks as though there is definite evidence of Iraq resuming oil sales."
But he added that the move had been expected and virtually priced into the market.
Market players were also digesting the latest figures for U.S. crude stocks, which showed that reserves fell sharply last week.
The U.S. Department of Energy said stocks fell by 3.4 million barrels last week to 288.7 million barrels. Earlier the American Petroleum Institute (API) put the drawdown at more than one million barrels.
But Hartree said that the market was no longer living in fear of a stocks shortfall.
In recent weeks, market players have become convinced that there will be sufficient crude supply to meet demand over the northern hemisphere winter, and prices have eased from high points above $35 a barrel as a result.
"Stocks are not high but not desperately low, but the trend is tending to positive which is a big change from this time last year, when stocks were falling dramatically," he said.
"There is no immediate threat of particularly cold weather, but even if there is a cold snap we are not going to have a supply crisis."
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