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WTI futures were slightly higher during early trade in Europe today, while Brent was unchanged after a slump on Monday. With subsiding violence in Iraq and ever less threat perceived to the oil-producing South crude has dropped earlier gains and is now in even ground. The official government report on US oil inventories is due later today.

West Texas Intermediate futures for settlement in August traded for $103.56 per barrel at 6:37 GMT on the New York Mercantile Exchange, up 0.15%. Prices ranged from $103.60 to $103.37 per barrel. The US contract dropped 0.18% on Tuesday, after losing 0.51% the previous session.

Meanwhile on the ICE in London, Brent futures due in August stood for a 0.03% increase at $108.97 per barrel. Daily high and low stood at $109.00 and $108.78 per barrel, respectively. Brent’s premium to WTI stood at $5.41, after last session’s closing margin of $5.54. The European contract dropped 1.18% yesterday, after a further 0.36% loss on Monday.

“We now get back to underlying fundamentals and look to the northern hemisphere summer as a driver of demand,” Michael McCarthy, chief strategist at CMC Markets in Sydney, said for Bloomberg. “One of the key drivers is that there has been no further advance in Iraq.”

The private American Petroleum Institute (API) posted its weekly reading on US oil inventories yesterday. Crude stockpiles were reported to have lost 1.7 million barrels for the week ended July 4. Gasoline stocks were said to have added 0.112 million barrels, while distillates dropped 0.522 million barrels. The official Energy Information Administration (EIA) report is due later today, and a Bloomberg survey suggested a 2.7 million-barrel draw for crude inventories.

Last weeks log revealed a 3.155 million-barrel draw for commercial crude oil inventories, gasoline stocks dropped 1.235 million barrels, while distillates added 0.975 million barrels. Refineries picked up pace, with gasoline production adding some 5% as summer driving season enters peak period.

Iraq

The dominant force on oil markets for the past few weeks has had a diminishing impact on prices recently as investors realized the main oil-producing south Iraq is safe and exports are actually set to climb.

Last week saw some inconclusive developments in Iraq. The military, reinforced by urgently-purchased Russian fighter-jets, had indecisive actions against the ISIS-led militants in the northern half of the country. Meanwhile, the Iraqi parliament failed to elect new leadership, as Sunni and Kurdish representatives boycotted the vote, depriving the election body of a quorum.

The semi-autonomous Kurdish state in northern Iraq fields its own army, and has recently come under attack by ISIS. The Kurds had occupied Kirkuk, an oil-center which lies beyond the borders of their state in Iraq, after the regular Iraqi army fled from the insurgents earlier in June, and have now declared they will not leave the city before an independence referendum takes place, with Israel also voicing support for an independent Kurdistan.

Technical view

According to Binary Tribune’s daily analysis, in case the West Texas Intermediate August future on the NYMEX breaches the first resistance level at $104.06, it probably will continue up to test $104.73. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $105.25.

If the contract manages to breach the first key support at $102.87, it will probably continue to drop and test $102.35. With this second key support broken, the movement to the downside will probably continue to $101.68.

Meanwhile, August Brent on the ICE will see its first resistance level at $109.84. If breached, it will probably rise and probe $110.73. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $111.31.

If Brent manages to penetrate the first key support at $108.37, it will likely continue down to test $107.79. With the second support broken, downside movement may extend to $106.90 per barrel.

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