June 27, 2014 / 4:20 AM / 3 years ago

Brent holds above $113, but heads for biggest weekly drop since March

* Oils prices retain most of Thursday’s losses

* Receding worries about supply from Iraq drag on prices

* U.S. oil on track for biggest weekly loss in a month

By Keith Wallis

SINGAPORE, June 27 (Reuters) - Brent crude steadied above $113 a barrel on Friday, holding on to most of previous session’s losses and heading for the biggest weekly loss since March as investors unwound their positions on reduced concerns over exports from strife-torn Iraq.

Prices have dropped about $2.50 from a nine-month high of $115.71 hit on June 19 as output from Iraq’s southern oilfields - which produce most of the nation’s 3.3 million barrels per day - remained unaffected by fighting in the north and west.

“The risks can’t be dismissed but the fact time has gone by suggests investors are getting nervous about the risk premium (built into Brent),” said Ric Spooner, chief markets analyst at Sydney’s CMC Markets. “We might start to see some unwinding of investors’ positions if Baghdad holds steady.”

Brent slipped a cent to $113.20 a barrel by 0414 GMT after falling 79 cents in the previous session. Brent is set for a weekly loss of 1.4 percent, the most in three months.

U.S. crude was down 5 cents at $105.79 after settling 66 cents down at $105.84, the lowest settlement since June 11. It is set for a 1.4 percent weekly loss, biggest in a month.

If fighting between Sunni militants and Iraq government forces is kept north of Baghdad then the chances of supply disruptions would ease, Spooner said.

But investors are still watching how the fight for control of Iraq’s largest refinery, the 300,000-barrel-per-day Baiji complex, unfolds.

Weaker-than-expected U.S. consumption data was among the other factors responsible for the oil price drop, Spooner said.

U.S. consumer spending rose less than expected in May, prompting economists to downgrade estimates for second-quarter growth, muddying the outlook for demand from the world’s top consumer of oil.

Developments in Ukraine after U.S. Secretary of State John Kerry said Russia should call on pro-Russian separatists in eastern Ukraine to disarm within “the next hours” will also give direction to energy prices. Ukraine is a key gas supply route to Europe from Russia.

Elsewhere, senior diplomats from western powers met in Brussels on Thursday to seek ways to resuscitate negotiations with Iran over its contested nuclear programme, less than four weeks before a late-July deadline to strike an accord.

Libya has increased oil production to 300,000 barrels a day (bpd) after the southwest El Feel field boosted output to 105,000 bpd, a spokesman for National Oil Corp said on Thursday. The eastern Hariga oil port has also reopened. (Editing by Himani Sarkar)

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