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Islamic State overran the western city of Ramadi
in the biggest defeat for the Baghdad government since last
summer.
Front-month Brent futures <LCOc1> were up 7 cents at $66.88 a
barrel by 1050 GMT after earlier climbing earlier to $67.88 a
barrel. U.S. crude <CLc1> rose 42 cents to $60.11 a barrel.
"The fact that Islamic State can still carry out major
operations even after nearly a year of air strikes confirms that
Iraq will remain unstable for a long period," said Richard
Mallinson, geopolitical analyst at London-based Energy Aspects.
"However, in the short term, supply risks don't look higher than
before. The market is still oversupplied and if prices go much
higher in the U.S. we could start to see some drilling
returning, which would slow down the rebalancing process."
Goldman Sachs lowed their Brent crude price assumption from 2016
to 2019 from $70 a barrel to $62-$65 a barrel and for 2020 from
$70 a barrel to $55 a barrel. At the same time, the bank raised
its 2015 price assumption from $52 a barrel to $58 a barrel.
"We see global oil demand being met by U.S. shale, which is
continuing to benefit from efficiency and productivity
improvements, and OPEC," Goldman said in a report.
Signs that OPEC was unlikely to cut output in its key meeting
next month put further strain on the supply outlook.
Kuwait OPEC Governor Nawal al-Fuzaia said that oversupply in the
global oil market is due to slow demand and a rise in production
from shale oil, but not from the Organization of Petroleum
Exporting Countries.
Iran's Deputy Oil Minister Rokneddin Javadi told Reuters that
OPEC was unlikely to cut output in June, and that Iran hoped its
crude exports would return to pre-sanctions levels of 2.5
million barrels per day within three months once a deal to lift
an oil embargo is finalised.
(Additional reporting by Henning Gloystein in Singapore; Editing
by Dale Hudson and William Hardy)
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