Oil rose to near $106 per barrel Thursday as an insurgency in Iraq raised the risk of disruption to supplies after OPEC vowed to keep output unchanged.
Benchmark U.S. oil for July delivery was up $1.45 to $105.85 a barrel at 1010 GMT in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract added 5 cents to close at $104.40.
Brent crude, a benchmark for international oils, was up $2.08 to $111.44 a barrel on the ICE exchange in London.
The al-Qaida-inspired group that captured two key cities in Iraq earlier this week vowed Thursday to march on to Baghdad.
One of those two cities, Mosul, lies in an area that is a major gateway for Iraqi oil. While the loss of the city has no immediate effect on oil exports, now at over 3 million barrels a day, it adds to concerns over security and the country’s plans to expand oil production.
On Wednesday, OPEC countries agreed to keep their output target unchanged at 30 million barrels a day. OPEC Secretary General Abdullah Al-Badry said the oil market is “very stable.”
The price of oil rose after the decision by the oil cartel. Traders interpreted the decision as recognition within OPEC that most members would not be able to substantially increase output in the short-term even if the world’s demand for crude increases. The global economy is expected to expand 2.8 percent this year according to World Bank, still faster than last year’s 2.4 percent.
The U.S. Energy Department’s weekly inventories report showed a larger-than-expected drop in U.S. stockpiles of crude oil, down 2.6 million barrels in the week ending June 6 from the previous week. It was expected to show a 1.2 million barrel fall, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 5.5 cents to $3.056 a gallon.
— Natural gas rose 4.1 cents to $4.549 per 1,000 cubic feet.
— Heating oil added 5.9 cents to $2.963 a gallon.