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Global oil prices diverge as market eyes Iraq

Global oil prices diverged on Wednesday as the leading US benchmark fell following an American energy inventory report while the main European contract rose in response to more violence in Iraq.

NEW YORK: Global oil prices diverged on Wednesday as the leading US benchmark fell following an American energy inventory report while the main European contract rose in response to more violence in Iraq.

US benchmark West Texas Intermediate for July delivery fell 39 cents to $105.97 a barrel on the New York Mercantile Exchange.

But Brent oil for August delivery, which is traded in London, advanced 81 cents to $114.26 a barrel.

Wednesday's trade was similar to Tuesday, when WTI fell ahead of the US supply report, but Brent gained due to Iraq.

The US Energy Information Administration's weekly inventory report showed commercial crude stocks in the world's biggest crude consumer fell by 600,000 barrels, less than the 1.1 million drop on average projected by analysts surveyed by The Wall Street Journal.

The US inventory report also showed a bigger-than-expected increase in US gasoline supplies.

The report "suggests the US market continues to suffer from a weak fundamental picture," said Gene McGillian, a broker and analyst at Tradition Energy.

But McGillian noted that WTI's only modest price fall reflected the US oil market is also concerned about Iraq, even though it would be less directly affected by a disruption to Iraqi supplies than the European market.

"As long as there's a threat we could have a regional crisis in Iraq or problems in Ukraine -- I just don't see the market suffering a pullback," he said.

On Wednesday, Iraq's foreign minister said Iraq had officially asked the US to conduct air strikes against rebels. Meanwhile, militants attacked the Baiji oil refinery and sized more territory in the north.

Analysts said a takeover of Baiji by the rebels could pressure domestic fuel supply in northern Iraq.

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