Oil price eases to near $104 per barrel after soaring on militant gains in Iraq

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The price of oil extended losses to near $104 a barrel Thursday as the risk of supply disruptions in Iraq continued to recede.

Benchmark U.S. crude for August delivery was down 40 cents to $104.08 a barrel at 0655 GMT in electronic trading on the New York Mercantile Exchange, its sixth day of declines. The contract fell 86 cents to $104.48 on Wednesday.

The fall in prices came despite a report on Wednesday from the U.S. Department of Energy that showed stockpiles of crude fell a larger-than-expected 3.2 million barrels last week in a possible sign of increased demand.

Oil prices in recent weeks have largely been driven by concerns that violence in Iraq, OPEC’s second-largest producer, would disrupt supplies. Oil reached a 10-month closing high of $107.26 on June 20.

The al-Qaida-inspired Islamic State of Iraq and the Levant rampaged across Iraq in recent weeks, feeding off the chaos of neighbouring Syria’s civil war to seize control of a large chunk of territory in Iraq and effectively erasing the border between the two countries.

Despite the chaos, Iraqi oil production continued and prices began to stabilize when the militants advance appeared to have slowed after encountering stiff resistance in Shiite-majority regions of Iraq.

Brent crude, a benchmark for international oils, was down 33 cents to $110.91 a barrel in London.

In other energy futures trading on the Nymex:

• Wholesale gasoline was down 0.6 cent at $3.019 a gallon.
• Natural gas added 0.8 cent to $4.365 per 1,000 cubic feet.
• Heating oil fell 0.8 cent to $2.938 a gallon.

(TSX:ECA, TSX:IMO, TSX:SU, TSX:HSE, NYSE:BP, NYSE:COP, NYSE:XOM, NYSE:CVX, TSX:CNQ, TSX:TLM, TSX:COS.UN, TSX:CVE)