Oil Drops Under $106 As Iraqi Worries Ease

Benchmark prices of oil in the U.S. were pulled lower on Tuesday prior to an update on the supply levels for the U.S.

Worries over the risks to the production of oil in Iraq have softened.

Crude oil for July dropped 68 cents to $105.62 per barrel in trading electronically. The contract Monday lost 1 cent and closed at $106.90 per barrel. Prices of oil last week surged by 4.1%, which was the largest percentage gain for a week since December 6 of last year.

The price of oil was still near a high of nine months. The increases were triggered of late by insurgents in Iraq seeking to have a strict Islamic state and are seizing towns pushing towards Baghdad the country’s capital.

Over this past weekend, violence escalated as the rebels led by ISIS, the Islamic State in Iraq and the Levant showed photos that had been taken of an execution of dozens. Those being executed are said to be Shiite soldiers from Iraq.

The ongoing fighting is not near the center of oil production in the southern region of Iraq.

The International Energy Agency announced on Friday that the oil supplies in Iraq were not in any immediate risk, but the possibility of oil exports returning from the country’s northern region were dim.

Attacks on the pipeline from Iraq in Turkey prevented Iraq from exporting since March in the north.

The current Iraq crisis could be playing into the favor of the KRI or Kurdish Region of Iraq, which could add supply quickly if there is an agreement reached over exports.

Later Tuesday, investors will look to data from the American Petroleum Institute a trade group.

Analysts believed the stocks in crude oil in the U.S. have fallen to 1.4 billion barrels for the week ending June 13.

The Energy Information Administration is due to release on Wednesday its inventory data.

Last week, the API announced that supplies of crude had increased 1.5 million barrels in comparison with estimates of a decline of more than 1.2 million barrels.

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