(Corrects "profit-taking" to "short-covering" in the headline
and first paragraph)
* U.S. crude oil reaches nine-month high
* Iraq government forces appear to hold biggest refinery
* Crude exports from southern Iraq unaffected
By Lorenzo Ligato
NEW YORK, June 20 U.S. crude oil jumped above
$107 a barrel on Friday, reaching a new nine-month high on the
back of short-covering from the July futures contract expiration
and expectations of higher refinery runs this summer.
Rising U.S. oil prices further constricted their discount to
Brent crude, which fell from a nine-month high, slipping below
$115 a barrel, on easing concerns over supply disruptions due to
the violence in Iraq.
The spread between the two benchmarks narrowed for the first
time in 10 days, encouraging traders to take profits.
"Brent has been giving back some of its gains from the
previous days, while WTI (West Texas Intermediate) has been
rallying ahead of the expiration of the contract. So there could
be some spread-play occurring," said Andrew Lipow, president of
Lipow Oil Associates in Texas.
Brent crude slipped 25 cents to settle at $114.81 a
barrel. It had reached $115.71 on Thursday, its highest intraday
price since Sept. 9, 2013.
U.S. crude rose 83 cents to settle at $107.26 a
barrel, the highest settlement since Sept. 18. It had reached an
intraday high of $107.73 earlier in the session, as traders took
profits and covered their short positions ahead of the contract
expiration, said Santiago Diaz, a broker at INTL FCStone in
The spread CL-LCO1=R between the two benchmarks narrowed
to close at $7.98 from a spread of $9.01 in the previous
session. It had been widening since last week, as the conflict
between Iraqi government-led forces and Sunni militants raised
the specter of supply disruptions in the global oil market.
Fighting concentrated around Iraq's largest refinery, a
300,000-barrel-per-day facility located in Baiji, 124 miles (200
km) north of Baghdad.
Government forces appeared to be holding out in the refinery
on Friday, mitigating export disruption concerns. In addition,
the major oilfields south of Baghdad, which export at least 2.5
million barrels of oil per day, remain unaffected.
Brent crude on Friday fell for the first time since Monday,
though it is still up more than $2 from the beginning of the
week - its second weekly gain in a row.
"We've been rallying for the entire week here and reached a
new nine-month high. Now Brent is taking a pause for breath, as
people assess what's the reality in Iraq," said Matt Smith, an
analyst at Schneider Electric in Louisville, Kentucky.
U.S. crude also was supported by the anticipated opening
later this month of the Seaway Loop oil pipeline, which will run
alongside the 400,000-bpd Seaway line and transport another
450,000 barrels per day from Cushing, Oklahoma to Houston.
(Additional Reporting by Alex Lawler in London and Jacob
Gronholt-Pedersen in Singapore; Editing by David Evans, Keiron
Henderson, Steve Orlofsky and Jessica Resnick-Ault and Paul