(Corrects milestone in Brent and WTI prices in paragraph 4 and
* Uncertainty over Iraq and Ukraine supplies underpin prices
in short term
* U.S. crude stocks last week seen down 2.2 mln barrels,
By Lorenzo Ligato
NEW YORK, July 1 Crude oil prices dipped
slightly on Tuesday on easing concerns of supply disruptions due
to the conflicts in Iraq and Ukraine, whilst gaining some
support from upbeat manufacturing data in China, the world's
second-biggest oil consumer.
"The market has been on a downtrend since peaking last
week," said Dominick Chirichella of the Energy Management
Institute in New York. "The latest data from China is
interesting: it's not going to result in a big surge in oil
demand anytime soon, but it's a baby step in the right
China's factory activity hit multi-month highs in June,
official and private surveys showed, reinforcing signs its
economy is steadying as the government steps up policy support.
Brent crude lost 7 cents to end at $112.29 a barrel,
the lowest settlement since June 11.
U.S. oil lost 3 cents to settle at $105.34 a barrel,
also the lowest point since June 11.
Oil markets have for weeks been rattled by supply concerns
due to the Ukraine crisis, while a takeover of large areas of
Iraq by Sunni militants has stoked fears of disruption in
exports from OPEC's second-biggest producer.
Although oil exports have not been disrupted so far, the
geopolitical uncertainty is likely to keep supporting prices in
the short term, analysts said.
"Supply-related headlines and agitation (in Iraq and
Ukraine) will keep the speculators on the long side of the
market," said Thomas Saal, an analyst at INTL Hencorp Futures,
LLC in Miami.
Iraq's new parliament convened on Tuesday under pressure to
name a unity government to prevent the country from splitting
apart after an onslaught by Sunni militants who have declared a
"caliphate" to rule over the world's Muslims.
Meanwhile, in Ukraine, Kiev renewed military operations
against pro-Russian separatists in the eastern part of the
country, as Russian President Vladimir Putin vowed to protect
the interests of ethnic Russians abroad.
With the market pointing "sideways," investors unloading net
long positions ahead of the U.S. Independence Day holiday
weekend may be driving the price down, said a futures broker in
U.S. CRUDE INVENTORY FORECAST
The U.S. oil benchmark drew support from forecasts that
crude inventories fell 2.2 million barrels last week, ahead of
weekly stock reports from the American Petroleum Institute and
the U.S. Energy Information Administration.
Oil prices also were supported by a slide in OPEC's output,
which fell in June from a three-month high in May, a Reuters
survey found, as fighting in Iraq closed the country's largest
refinery and technical problems slowed exports from its southern
A Reuters monthly poll of 26 analysts forecast Brent crude
oil would average $108 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.
(Additional reporting by Ron Bousso in London and Manash
Goswami in Singapore; Editing by Jason Neely, Keiron Henderson,
Jessica Resnick-Ault, James Dalgleish, Paul Simao and Marguerita