Singapore: World oil prices fell below $107 in Asian trade Friday on news that the damage to an Iraqi export pipeline attacked by saboteurs was not as serious as earlier thought, traders said.
Prices spiked overnight following reports of the attack on the pipeline near the southern city of Basra, where Iraqi forces have mounted an assault on Shiite militants, sparking fierce fighting.
In afternoon trade, New York’s main oil contract, light sweet crude for delivery in May, fell $1.08 to $106.50 per barrel.
The contract had closed at $107.58 per barrel during floor trading on Thursday at the New York Mercantile Exchange, after reaching an intraday high of $108.22.
London’s Brent North Sea crude for May dropped 79 cents to $104.21 per barrel after settling at $105 on Thursday.
David Johnson, an oil analyst at Macquarie Research in Hong Kong, said prices were easing following reports that “the damage (on the pipeline) has been sorted out and the problem is not as serious as we thought it would be.”
A spokesman for Iraq’s Southern Oil Company told AFP on Thursday that saboteurs had blown up one of the country’s two main oil export pipelines in Basra amid escalating fighting.
“The market has been anxious for a couple of days but there has been no real threats until the incident in Basra,” said Jason Feer, vice-president and general manager of energy market analysts Argus Media Ltd in Singapore.
“What the market fears is the actual physical disruption of oil out of Iraq.”
Oil prices also continued to be supported by a weaker-than-expected energy stockpiles report in the United States, the world’s biggest energy consumer, dealers said.
The US government said Wednesday that crude inventories were unchanged at 311.8 million barrels in the week ending 21 March, contrasting sharply with market expectations for a weekly gain of 1.8 million barrels.
Global supplies are being further pressured by a decision earlier this month by the Organization of the Petroleum Exporting Countries to maintain the cartel’s output levels.