Oil slips on hopes of stabilizing Iraq

Associated Press |

The price of oil declined for the third straight day Monday on signs that the insurgency in Iraq has been slowed and may be turned back.

Benchmark U.S. crude for August delivery fell 37 cents to close at $105.37 a barrel in New York. The contract has fallen for three days in a row and five out of the last six trading days after closing at 10-month high of $107.26 on June 20.

Brent crude, used to price international oils used by many U.S. refineries, fell 94 cents to close at $112.36 a barrel in London.

Oil prices were steady going into the weekend as markets grew accustomed to news reports of violence in Iraq where the Iraqi government is trying to wrest back some of the territory it has lost to insurgents, Desmond Chua, a market analyst at CMC Markets in Singapore, said in a commentary. The price of oil rose in recent weeks as investors worried that the surge of violence in OPEC's second-largest exporter would reduce global crude supplies.

While the situation in Iraq is far from resolved, it appears less likely that the insurgency will spread to important oil-producing regions in the south.

"Additional price gains have proven extremely difficult especially with Iraq seeing some evidence of semblance of stability," wrote energy analyst Jim Ritterbusch in a report Monday. He also noted that oil prices were pressured by reports that Libyan crude production is edging higher and that the country's biggest export terminal could re-open in August.

On Tuesday, a preliminary reading of Chinese factory activity will give investors the latest gauge of economic activity — and potential oil demand — in China, the world's biggest oil importer.

In other energy futures trading on the Nymex:

—Wholesale gasoline fell 3.1 cents to close at $3.043 a gallon.

—Natural gas rose 5.1 cents to close at $4.440 per 1,000 cubic feet.

—Heating oil fell 2.8 cents to close at $2.975 a gallon.

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