Brent Crude Repeatedly Surpasses $114 a Barrel amid Iraq Turmoil
June 20, 2014 7:20 am
In June, brent crude repeatedly rose above $114 per barrel.
This might matter to individuals involved in crude oil trading, as Wall Street analysts predicted that this international benchmark would reach as much as $116 a barrel by the end of 2014, according to Bloomberg. Since brent crude has repeatedly neared this price, it is anyone’s guess how high it will go.
Brent crude rose above $114 per barrel on June 13, which was the first time in nine months that it surpassed this crucial level, the media outlet reported. This appreciation happened as violence intensified in Iraq.
Iraq turmoil drives oil appreciation
Then, on June 18, the international benchmark surpassed $114 a barrel once again, according to Reuters. This happened as concerns circulated about the ability of Iraq to export the commodity. Sunni militants infiltrated a refinery in the city of Baiji, which is more than 100 miles north of Baghdad. Rebels seized control of as much as three-quarters of the facility, according to some reports.
There was some uncertainty surrounding what impact the militants were having, the media outlet reported. While Baghdad’s Shi’ite government maintained that its forces controlled the territory that holds the Baiji refinery, an official told the news source that Sunni militants had command of three-fourths of this jurisdiction.
While many are worried about the ability of Iraq’s government to supply the outside world with the oil it needs, the government of the Kurdistan Region might step up its exports of the commodity, according to the news source. Abhishek Deshpande, Natixis oil markets analyst, spoke to the situation, saying that this particular jurisdiction could more than double its daily output of oil.
This possibility may seem promising, but one market expert noted the potential impact of Iraq’s oil output being hampered, Bloomberg reported.
“A disruption of Iraqi supply would represent a global energy crisis,” John Kilduff, partner at hedge fund Again Capital LLC, told the news source. “This isn’t hyperbole.”
Traders look to Fed meeting
While global market participants the world over will likely be monitoring the situation in Iraq, they were also expected to keep a close eye on the outcome of the Federal Reserve policy meeting ending June 18, according to Reuters. Many expected the central bank to announce another reduction in quantitative easing, which would cut these monthly bond purchases to $35 billion.
The financial institution has engaged in unprecedented stimulus over the last five years, buying more than $4 trillion in securities in an effort to jumpstart the economic recovery. The Fed has increased the money supply in an attempt to improve business conditions, and putting more cash in people’s hands generally supports commodity prices.
Between late 2012 and January 2014, the Fed purchased $85 billion worth of bonds every month. Late last year, it announced that it would cut down on these transactions in January of this year. The financial institution provided this specific timeline after making several references to potential reductions in these purchases.
Demand could surge, says IEA
One more factor that could have a major impact on brent crude is surging demand for oil. The Paris-based International Energy Agency predicted recently that during the final quarter of 2014, global oil consumption will “increase sharply” and the Organization of the Petroleum Exporting Countries will need to increase its production to keep up, according to Bloomberg.
Investors involved in crude oil trading might benefit from monitoring the many different variables that could impact the price of the commodity.
In June, brent crude repeatedly rose above $114 per barrel.
This might matter to individuals involved in crude oil trading, as Wall Street analysts predicted that this international benchmark would reach as much as $116 a barrel by the end of 2014, according to Bloomberg. Since brent crude has repeatedly neared this price, it is anyone’s guess how high it will go.
Brent crude rose above $114 per barrel on June 13, which was the first time in nine months that it surpassed this crucial level, the media outlet reported. This appreciation happened as violence intensified in Iraq.
Iraq turmoil drives oil appreciation
Then, on June 18, the international benchmark surpassed $114 a barrel once again, according to Reuters. This happened as concerns circulated about the ability of Iraq to export the commodity. Sunni militants infiltrated a refinery in the city of Baiji, which is more than 100 miles north of Baghdad. Rebels seized control of as much as three-quarters of the facility, according to some reports.
There was some uncertainty surrounding what impact the militants were having, the media outlet reported. While Baghdad’s Shi’ite government maintained that its forces controlled the territory that holds the Baiji refinery, an official told the news source that Sunni militants had command of three-fourths of this jurisdiction.
While many are worried about the ability of Iraq’s government to supply the outside world with the oil it needs, the government of the Kurdistan Region might step up its exports of the commodity, according to the news source. Abhishek Deshpande, Natixis oil markets analyst, spoke to the situation, saying that this particular jurisdiction could more than double its daily output of oil.
This possibility may seem promising, but one market expert noted the potential impact of Iraq’s oil output being hampered, Bloomberg reported.
“A disruption of Iraqi supply would represent a global energy crisis,” John Kilduff, partner at hedge fund Again Capital LLC, told the news source. “This isn’t hyperbole.”
Traders look to Fed meeting
While global market participants the world over will likely be monitoring the situation in Iraq, they were also expected to keep a close eye on the outcome of the Federal Reserve policy meeting ending June 18, according to Reuters. Many expected the central bank to announce another reduction in quantitative easing, which would cut these monthly bond purchases to $35 billion.
The financial institution has engaged in unprecedented stimulus over the last five years, buying more than $4 trillion in securities in an effort to jumpstart the economic recovery. The Fed has increased the money supply in an attempt to improve business conditions, and putting more cash in people’s hands generally supports commodity prices.
Between late 2012 and January 2014, the Fed purchased $85 billion worth of bonds every month. Late last year, it announced that it would cut down on these transactions in January of this year. The financial institution provided this specific timeline after making several references to potential reductions in these purchases.
Demand could surge, says IEA
One more factor that could have a major impact on brent crude is surging demand for oil. The Paris-based International Energy Agency predicted recently that during the final quarter of 2014, global oil consumption will “increase sharply” and the Organization of the Petroleum Exporting Countries will need to increase its production to keep up, according to Bloomberg.
Investors involved in crude oil trading might benefit from monitoring the many different variables that could impact the price of the commodity.
The post Brent Crude Repeatedly Surpasses $114 a Barrel amid Iraq Turmoil appeared first on | HY Markets Official blog.
Related Posts: