LONDON - Oil prices tumbled further Tuesday as Iraq restored oil exports and hedge funds continued the rush to take profits from record highs. U.S. light crude for October delivery slumped 53 cents to $41.75 a barrel in electronic trading, taking losses to $7.65 in just eight trading sessions from an all-time peak of $49.40 a barrel. London Brent crude slumped $1.21 to $39.43 a barrel, the lowest in four weeks.
“Funds are being forced out, but many of them still have deep long positions,” said brokers Refco of the investment funds who helped spur U.S. crude to the Aug. 20 record.
Exports of southern Iraqi Basra crude ran near full capacity at 1.7 million barrels a day after repairs following sabotage attacks. The first shipment for three months of northern Iraqi Kirkuk crude was loading at Turkey’s export terminal Ceyhan.
An Iraqi official said Baghdad aimed to sell up to 300,000 barrels per day of Kirkuk crude via term contract deals. That was read as a sign Iraq is having some success in thwarting attacks that have all but idled exports from its northern pipeline since the US-led war began March last year. A number of European refiners are following the lead of Turkey’s Tupras, the first company to seal a post-war term contract for Kirkuk oil.
“We hope to sell about 10 million barrels of Kirkuk a month through term contracts,” the official told Reuters. “We’re concentrating on Europe and have already had a number of requests from refiners there.”
Despite the price drop, crude is still nearly 30 percent higher than at the start of the year as producers pump close to full-tilt to meet the fastest world demand growth in 24 years.
OPEC President Purnomo Yusgiantoro said Monday the cartel which controls more than half of the world’s exports aimed to increase spare output capacity by about 1 million barrels per day (bpd) in the next few months to help bolster stretched supplies. OPEC is already pumping close to 30 million bpd, its highest level since 1979.
Only Saudi Arabia has any significant spare capacity within the 11-member cartel, which is due to meet Sept. 15 in Vienna to review output policy. Yusgiantoro said “non-fundamental” factors made it hard to forecast which side of the 45-dollar-per-barrel mark prices would now head.
“Right now it (the oil price) is still below 45 US dollars a barrel, whether it will go up or down, it’s difficult to predict,” Yusgiantoro told reporters in Jakarta. He said heavy demand from rapidly industrialising China and India was placing a burden on the oil market, while supply difficulties in Iraq were also putting pressure on prices.
“But we also see non-fundamental factors. This is what is difficult to predict,” said Yusgiantoro, who is also Indonesia’s energy minister.
