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Oil prices dip on profit taking, Iraq

World oil prices slipped on profit taking and marginally easing concerns about the Iraq crisis, while in the US a storm sparked fears about lower gasoline demand.

NEW YORK: World oil prices slipped on Tuesday on profit taking and marginally easing concerns about the Iraq crisis, while in the US a storm sparked fears about lower gasoline demand.

US benchmark West Texas Intermediate for August dipped three cents to finish at $105.34 a barrel. The essentially flat WTI close came as traders worried that a tropical storm brewing off the US coast could hinder driving over the upcoming three-day holiday weekend.

Brent crude for delivery in August fell 94 cents to $112.36 a barrel in London.

The New York contract, which had started the trading session in positive territory, lost ground throughout the day to finish slightly lower.

Bob Yawger of Mizuho Securities said the market was watching Tropical Storm Arthur, the first named storm of the Atlantic hurricane season, as it moved off the coast of Florida ahead of the Independence Day holiday Friday.

Yawger said there was speculation that the storm, which is expected to strengthen, could move along the East Coast and curtail driving over the long weekend, killing gasoline demand instead of "the holiday extravaganza that was forecast."

The US financial markets will be closed on Friday.

Earlier in the day, oil prices gained a boost from upbeat Chinese manufacturing data, showing activity expanded at its fastest pace this year in June.

Traders kept an eye on the security situation in major crude producer Iraq.

Islamist militants who have overrun swathes of territory in Iraq's north on Sunday declared a caliphate - or Islamic state - in the regions under their control, as fighting continued unabated.

The militants, who began a lightning offensive last month, have yet to directly threaten the key oil-producing region in Iraq's south.

"The market continues to suffer from extended profit taking and little new developments on the geopolitical front, while global supplies and OPEC's spare production capacity are under no immediate threat for now," said VTB Capital analyst Andrey Kryuchenkov.

The violence in Iraq has a direct bearing on global crude prices because the country is the second-biggest oil exporter in the 12-nation Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia.

Iraq has more than 11 percent of the world's proven resources and produces 3.4 million barrels a day.

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