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Oil keeps rising, nears $107 on Iraq fighting

Friday - 6/13/2014, 12:42pm  ET

In this still image posted on a militant Twitter account on Wednesday, June 11, 2014, which has been authenticated based on its contents and other AP reporting, militants parade down a main road in Mosul, Iraq. Iraqi officials say al-Qaida-inspired militants who this week seized much of the country's Sunni heartland have pushed into an ethnically mixed province northeast of Baghdad, capturing two towns there.(AP Photo/militant source via Twitter)

PABLO GORONDI
Associated Press

The price of oil continued to climb Friday, nearing $107 a barrel as Iraq's widening insurgency fueled concerns that crude supplies from OPEC's No. 2 producer could be hurt.

After jumping over $2 on Thursday, the benchmark U.S. oil contract for July delivery was up another 44 cents to $106.97 a barrel in electronic trading on the New York Mercantile Exchange. It had earlier hit a high of $107.68.

Brent crude, a benchmark for international oils, was up 54 cents to $112.96 a barrel on the ICE Futures exchange in London.

Oil prices have risen to 10-month highs after an al-Qaida-inspired group vowed to march on Baghdad after capturing two key Iraqi cities this week, including Mosul, which is in an area that is a key gateway for the country's crude.

The violence in Iraq is mostly centered in the country's north, away from the major oil-producing regions of the south. The turmoil hasn't yet had a big effect on oil exports, though it raises concerns about whether Iraq can continue rebuilding its oil infrastructure and boost output to meet global demand.

"Without the oil production from the south of Iraq, the market would be stripped of an estimated 2.5 million barrels per day," said a report from analysts at Commerzbank in Frankfurt. "The sharp price rise in the last two days shows that this oil supply is no longer viewed as secure, either."

Iraq's oil production has risen by about a fifth since 2011 to 3.3 million barrels per day, making it the second biggest producer in OPEC behind Saudi Arabia.

In other energy futures trading on Nymex:

-- Wholesale gasoline advanced 0.27 cent to $3.0864 a gallon.

-- Natural gas added 0.8 cent to $4.77 per 1,000 cubic feet.

-- Heating oil was up 1.46 cents to $3.0039 a gallon.


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