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US oil below US$100 for first time in two months

Global oil prices dropped on Tuesday, with the US futures contract sinking below US$100 for the first time since May on receding worries about Iraq supply disruptions.

NEW YORK: Global oil prices dropped on Tuesday, with the US futures contract sinking below US$100 for the first time since May on receding worries about Iraq supply disruptions.

US benchmark West Texas Intermediate for August fell 95 cents to close at US$99.96 a barrel on the New York Stock Exchange. WTI had not finished below the century mark since May 9.

Brent North Sea for delivery in August sank 96 cents from Monday, settling at US$106.02 a barrel in London trade, its lowest level since April 7.

"Easing fears of an Iraqi supply disruption and tepid fuel demand levels continue to erase the geo-political risk premium (Iraq and the Ukraine) that boosted both markets to nine-month highs late last month," Eugene McGillian at Tradition Energy said in a research note.

Iraq's sharply divided parliament elected a speaker on Tuesday in a step forward in the delayed government formation process, as a renewed bid to recapture Tikrit from a jihadist-led militant offensive ended in retreat.

The offensive has not reached southern Iraq, home to the bulk of the country's oil industry.

After nearly three weeks of losses, the price of WTI was under pressure after the contract fell below certain technical support levels, accelerating its decline, said Bob Yawger of Mizuho Securities.

Investors kept an eye on US Federal Reserve Chair Janet Yellen's return to Congress for two days of semiannual testimony on the world's largest economy and the Federal Open Market Committee's future path on monetary policy.

"Yellen provided absolutely no guidance on when rates would rise and despite the rally in the greenback, the general tone of the FOMC statement was dovish," said Kathy Lien of BK Asset Management.

"The bottom line is that even with the improvements in the labour market, the Fed is not convinced that the economy is performing better."

The dollar rose slightly against the euro, pushing the euro to US$1.3569 from US$1.2619 on Monday. A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, typically acting to curb demand and undermining prices.

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