Oil prices rise on weak dollar

Tuesday 01 July 2014 13.06
Oil prices rise amid ongoing tensions in Iraq and Ukraine
Oil prices rise amid ongoing tensions in Iraq and Ukraine

Brent oil held above $112 per barrel today as investors took heart from upbeat manufacturing data in China while ongoing tensions in Iraq and Ukraine underpinned supply concerns. 

China's factory growth rose to a six-month high, adding to signs the economy of the world's second-biggest oil consumer is regaining strength. 

Oil markets have for weeks been rattled by supply concerns due to the Ukraine crisis and as a takeover of large areas of Iraq by Sunni militants stoked fears of disruption in exports from OPEC's second-biggest producer. 

The violence in Iraq has a direct bearing on global crude prices because the country is the second-biggest oil exporter in the 12-nation Organisation of the Petroleum Exporting Countries (OPEC) after Saudi Arabia. 

It has more than 11% of the world's proven resources and produces 3.4 million barrels a day.

Brent crude gained four cents to $112.40 a barrel, after ending down 94 cents at its lowest settlement since the rally spurred by the Iraqi crisis started on June 12. US oil was up 39 cents to $105.76 a barrel. 

A slide in OPEC's output also supported prices. The producer group's output fell in June from May's three-month high, a Reuters survey found, as fighting in Iraq closed its largest refinery and technical problems slowed its southern exports, underlining how unrest and outages in the Middle East and Africa are taking their toll on OPEC supply. 

A Reuters monthly poll of 26 analysts forecast Brent crude oil would average $108.00 a barrel in 2014, the highest average forecast of a Reuters poll so far this year and well above the $105.90 average projected in last month's poll. 

Keywords: dollar, iraq, oil