NEW YORK (Bloomberg) -- Oil declined for a second day as Iraq’s exports approached a record high in April, adding barrels to a worldwide supply glut that has pushed prices lower.
Futures settled below $45/bbl in New York after rallying to a five-month high last week. Iraq, excluding sales by the Kurdistan Regional Government, shipped 3.36 MMbpd last month, an oil ministry spokesman said by text message Sunday. Exports neared the November record-high of 3.365 MMbpd. Protests that included the storming of parliament in Baghdad broke up Sunday without affecting crude production, even as the political turmoil threatens to paralyze the government of OPEC’s second-largest producer.
Oil has rebounded after tumbling this year to the lowest since 2003 as U.S. production dropped below 9 MMbpd. OPEC crude production surged in April, led by Iran, which is seeking to regain market share after sanctions were lifted early this year.
“We have probably seen the worst of it in oil -- that’s the good news. The bad news is that the current price has just gotten ahead of itself,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.6 billion. “It appears that OPEC is trying to absorb all of the production loss that the U.S. is going to bring.”
Iraqi shipments
West Texas Intermediate for June delivery fell $1.14, or 2.5%, to settle at $44.78/bbl on the New York Mercantile Exchange. Total volume traded was about 26% below the 100-day average.
Brent for July settlement declined by $1.54, or 3.3%, to end the session at $45.83/bbl on the London-based ICE Futures Europe exchange. The global benchmark was at a 35-cent premium to WTI for July.
Iraqi exports rose from March’s 3.29 MMbpd. Iraq declared a state of emergency in Baghdad after supporters of Shiite Muslim cleric Moqtada al-Sadr stormed parliament. Protesters agreed to leave the capital’s fortified Green Zone after breaching the secure area on Saturday, Al-Sumaria television reported, citing a statement issued by the protests’ committee.
The country produced 4.31 MMbpd in April, data compiled by Bloomberg show, and drilling has increased as companies including BP Plc and Lukoil PJSC boost output at fields in the country.
OPEC output
The Organization of Petroleum Exporting Countries raised production by 484,000 bpd to 33.217 million in April, the most in monthly data compiled by Bloomberg going back to 1989, according to a survey of oil companies, producers and analysts. Iran’s output rose by 300,000 bpd to 3.5 million, the most since December 2011, according to the survey.
“Iraq and Iran have both increased production substantially,” said Kyle Cooper, director of research at IAF Advisors and Cypress Energy Capital Management in Houston. “If those inventories continue to rise at or above the five-year average pace of the next few weeks, then we could head back lower.”
U.S. crude inventories probably rose by 500,000 bbl to 541.1 million in the week ended April 29, according to a Bloomberg survey conducted before an Energy Information Administration report is released Wednesday.
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