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Despite renewed geopolitical risk on the oil market hailing from the Middle East, oil prices were down on Friday morning and set for a weekly loss as profit-taking weighed more on the price of oil than the Iraq-Kurdistan standoff and increased U.S.-Iran tensions.
At 9:55 a.m. EDT on Friday, WTI Crude was down 0.31 percent at $51.35, while Brent Crude was trading down 0.09 percent at $57.18. Both benchmarks rallied somewhat around noon EST, to $51.59 for WTI and $57.48 for Brent.
“There’s a little bit of profit-taking…The market has really been treading a small range all of this week without any true momentum,” Olivier Jakob, chief strategist at consultancy Petromatrix, told Reuters on Friday.
At the beginning of this week, Iraq moved to take control of oil fields in oil-rich Kirkuk from Kurdish forces, while the market was still digesting last Friday’s decision of U.S. President Donald Trump to officially withdraw his certification of Iranian compliance with the nuclear deal and kick the deal back to Congress for a decision.
On Tuesday, Iraqi government forces seized control of all oil fields that Iraqi state-held North Oil Company operates in the Kirkuk region from Kurdish forces. Geopolitical risk from the Middle East returned to the oil market, but oil prices did not surge as they would have done in previous years, in a sign that the market is still not feeling an imminent shortage of supply.
On Wednesday, the EIA pushed oil prices higher, reporting a major inventory decline of 5.7 million barrels for the week to October 13. At 456.5 million barrels, the authority said, crude oil inventories were within the upper limit of the seasonal average.
Related: A New Oil Crisis Is Developing In The Middle East
But also on Wednesday, reports started coming in that the flow of crude oil through the Kurdistan pipeline from Kirkuk to the Turkish port of Ceyhan had plummeted to some 225,000 bpd, from a typical flow of around 600,000 bpd.
On Thursday, Shell lifted the force majeure on Nigeria’s Bonny Light crude oil exports.
Even though oil prices dropped on Thursday and early on Friday, U.S. investment bank Jefferies thinks that “the oil market has moved into modest undersupply and we expect this will persist at least through the end of the year.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.