The price of oil opened below $26 a barrel here on Thursday for the first time for seven months after Iraq began loading oil for shipment again after a break of 12 days.
Reference Brent crude for January delivery was selling for $25.75 a barrel here, from $25.15 a barrel at the close on Wednesday.
In New York, benchmark light sweet crude for January delivery closed at $28.74 a barrel overnight.
Prices had brushed $25 a barrel late on Wednesday as Iraq began loading oil into tankers at its port at Mina al-Bakr after agreeing an extension of its oil-for-food deal with the United Nations.
News that Iraq was resuming the pumping of oil wiped out gains clocked up earlier on Wednesday in response to signs of a drawdown in US crude stocks.
Iraq halted oil exports earlier this month amid a dispute with the United Nations over demands from Baghdad for an extra payment of 50 cents a barrel for its oil into an account outside UN control.
This would have breached the terms of the UN oil-for-food deal. But the two sides announced on Wednesday that they had agreed on an extension to the pact.
Market watchers were nevertheless cautiously awaiting confirmation that Baghdad had resumed its exports in full.
"Fundamental (downward) pressure was provided by the restart of loadings from the Gulf Port of Mina al-Bakr," Lawrence Eagles at the GNI brokerage said.
But he added: "It remains unclear whether Iraq has started the full resumption of oil exports and has dropped its surcharge demand.
"If oil leaks out in drips and drabs, then officials will start to suspect that the surcharge is indeed being paid by some parties.
"But if the full flow resumes, then traders will suspect that the surcharge demand has been dropped."
Expectations of milder temperatures in the US Northeast also weighed down on prices, although the long-term forecasts show that temperatures will generally remain cold for at least two weeks, Eagles said.
Concerns that supplies would be insufficient to satisfy the thirst of the market in the event of a particularly cold winter in the northern hemisphere caused prices to rally to 10-year highs in September and October.
But prices have now slumped by almost a quarter since the end of November because most dealers now believe that there will be enough oil swilling around the market to meet demand until the winter thaws.—AFP.
©--Agence France Presse.
