August 7, 2014 / 5:01 AM / 4 years ago

UPDATE 9-Oil prices rise on reports U.S. mulling airstrikes on Iraqi militants

* Islamist insurgents advance closer to northern oilfield
    * Car bombs kill nine in Kurdish-held Kirkuk - sources

 (Updates prices to settlement, adds Brent-WTI spread)
    By Lorenzo Ligato
    NEW YORK, Aug 7 (Reuters) - Crude oil prices rebounded on
Thursday after reports the United States was considering
airstrikes on advancing Islamic militants in Iraq revived
concerns about supply disruptions from OPEC's No. 2 oil
    Brent crude gained 85 cents to settle at $105.44 a
barrel, and rose more than $1 in post-settlement trading. It had
closed at $104.59 a barrel on Wednesday, its lowest settlement
since Nov. 7.
    U.S. crude gained 42 cents to settle at $97.34 a
barrel, after closing at $96.92 a barrel in the previous
session, the weakest level since February.
    The spread CL-LCO1=R between the two benchmarks closed at
$8.10, its widest since June 24. 
    Brent and U.S. crude were down earlier on Thursday but
rallied after the New York Times reported U.S. President Barack
Obama was considering airstrikes on the Islamic State fighters
who have surged across northern Iraq toward the capital of its
Kurdish region.
    White House spokesman Josh Earnest would not confirm that
airstrikes were being considered. "There are no American
military solutions to the problems in Iraq," he said.
    The reports of possible U.S. airstrikes "helped move the
markets, but we need to see that actually happen before oil
prices can go up higher," said Gene McGillian, an analyst at
Tradition Energy in Stamford, Connecticut. He added that ample
global supplies were still pressuring oil prices, noting that
oil supplies from Iraq had not yet been interrupted.
    In mid-June, Brent and U.S. crude hit nine-month highs on
worries about the Sunni-fueled insurgency in Iraq. But prices
have fallen more than $10 a barrel over the past six weeks
despite the continued unrest, as traders and investors shifted
their attention to weak U.S. and global economic fundamentals.
    Earlier on Thursday, two car bombs killed nine people in the
Kurdish-held Iraqi oil city of Kirkuk, police and medical
sources said. 
    Shares in Oslo-listed oil producer DNO fell as much
as 24 percent on news of the insurgents' advance, as investors
worried about companies exposed to the unrest in the Kurdish
region. The company said its operations at the Kurdish Takwe
field near Iraq's border with Turkey had not been
    "Some market participants must have become a little
complacent about what's happening in Iraq," said Andrew Lipow,
president of Lipow Oil Associates in Houston, Texas.
    Meanwhile, refining issues in the United States, including
the four-week shut-down of a refinery in Coffeyville, Kansas,
are weighing on U.S. crude, ahead of the refinery turnaround
season in autumn, characterized by typically weaker demand.

 (Additional reporting By Jack Stubbs and Jacob
Gronholt-Pedersen; Editing by William Hardy, Dale Hudson, David
Evans, Edward McAllister, David Gregorio and Paul Simao)
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