NEW YORK (TheStreet) -- Crude oil prices were dipping Monday after state-sponsored Iraqi television reported that government troops regained control of western border crossings to Jordan and Syria.
WTI Light sweet crude oil for August delivery was falling 83 cents to $106 a barrel, while the August Brent crude contract was sliding 82 cents to $113.99 a barrel.
"Last night's open we saw prices spike above $115 on Brent and back above $107 on [light sweet crude] as there were concerns of these border crossings both in Jordan and in Syria being taken over by insurgents, but apparently they've regained control of those and that's why I think we're seeing a little bit of easing in prices thus far today," said Matt Smith, a commodities analyst at Summit Energy, in a phone interview.
Reports emerged that government forces abandoned the border with Jordan to leave Iraq's entire Western boundary without any troop presence.But oil prices took a turn below the flatline after state-sponsored Iraqiya television cited the Iraq defense ministry as claiming Iraqi soldiers regained the Al Waleed border into Syria and the Trailbil passage next to Jordan, Bloomberg reported. The news likely means Brent and WTI will remain in a trading range until militant group ISIS or the Iraqi military make new progress. While ISIS has gained control of a large swath of Iraqi cities in northern sections of the country, the oil-rich southern half of Iraq remains untouched by violence. Many oil analysts anticipate an ISIS insurgence into southern Iraq as unlikely, and few predict that the violence will reduce Iraqi oil output on a large scale. Enough uncertainties remain to keep WTI oil elevated above the year-to-date average price of $98.27 a barrel. A larger concern may be the security of Baghdad from ISIS progress. "[If] ISIS were to advance into Baghdad, the question of oil security in southern Iraq and the Kurdish region would pale into insignificance compared with the question of the potential breadown of Iraq as a sovereign entity," French investment bank Natixis wrote June 19 in a research note to clients. "At the moment all that's being priced into the market is fear, and so it's very much just a risk premium that we see on it," Smith said. Smith said any concern of a cut to oil supply is "some ways away."
Why Oil Isn't Spiking as Militant Group Tears Apart Iraq
Gold Is Surging but Don't Misinterpret It as a Trend -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux