Brent crude fell more than $1 on Monday, nearing $112 a barrel while US crude slipped below $105 as investors grew less worried about potential supply disruptions from Iraq. Heavy fighting in the north of Iraq has had little impact on the southern refineries that produce around 90 percent of the Opec member's oil shipments. Brent is still up about 3 percent this month, its biggest monthly gain since August. But it has come off the nine-month high of $115.71 hit two weeks ago.
"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." Brent fell $1.05 to $112.25 a barrel by 1:29 pm EDT (1829 GMT), after a 1.3 percent decline last week. US crude fell 90 cents to $104.84 a barrel, after sliding nearly 1.4 percent last week.
On Friday, US Secretary of State John Kerry and Saudi King Abdullah discussed global oil supplies during a meeting about the crisis in Iraq, a US 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, analysts said the fear factor would hold oil prices above $105 for US crude and $110 for Brent in the near future. "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 US June auto sales figures on Tuesday and US June payrolls on Thursday, a day early due to the Fourth of July holiday. Economists polled by Reuters expect US jobs to increase 213,000 in June for a fifth straight month of gains above 200,000. "It should be a supportive week for the economic fundamentals," said Richard Hastings, macro strategist at Global Hunter Securities in Charlotte, North Carolina.
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