OIL PRICES DROP IN INTERNATIONAL MARKET

Oil prices extended losses in Asia today on fading fears that the fast-moving crisis in crude producer Iraq could result in a major supply disruption, analysts said. US benchmark West Texas Intermediate (WTI) was down 47 cents at USD 105.70 while Brent crude eased 19 cents to USD 113.93 in mid-morning trade. WTI dropped 66 cents in New York and Brent fell 69 cents in London, after nearly two weeks of gains that pushed prices to nine-month highs last week. "Oil slipped as Iraq's oil production continued to be untouched by ongoing violence in the country," Singapore's United Overseas Bank said in a note to investors. Desmond Chua, market analyst at CMC Markets in Singapore, said the price fall indicated the onset of a "period of consolidation as the majority of the geopolitical premium has been priced in". Jihadist insurgents have captured swathes of Iraqi territory in a lightning offensive toward Baghdad from the north and west of the country. They have however yet to directly threaten the key oil-producing region in the south. US Secretary of State John Kerry yesterday pledged "intense" support for Iraq against the "existential threat" posed by the militants. 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 Petroleum Exporting Countries (OPEC) after Saudi Arabia. It has more than 11 per cent of the world's proved resources and produces 3.4 million barrels a day. Analysts said markets are also digesting a survey yesterday showing Chinese manufacturing growing in June for the first time this year, raising hopes for the economy. China is the world's top energy consumer, and is second to the United States in terms of crude oil consumption.

INDIA OIL OUTPUT DIPS

India's crude oil production dropped marginally in May as a fall in output at fields operated by state-owned ONGC and OIL negated increased flows from private firms including Cairn India. Crude oil production was at 3.16 million tonnes in May compared with 3.17 million tonnes in the same period a year ago, according to data released by the Oil Ministry here. Oil and Natural Gas Corp (ONGC) reported a 1.3 per cent drop to 1.87 million tonnes as its fields in Gujarat produced less. Oil India Ltd (OIL) produced 5.2 per cent less at 284,143 tonnes, while output from fields operated by private firms rose 3.1 per cent to 1.005 million tonnes. Natural gas production dipped 2.2 per cent last month to 2.94 billion cubic meters as private operators saw an almost 10 per cent drop in output. While ONGC's gas production was almost unchanged at 1.93 bcm, production from offshore fields of private firms such as Reliance Industries dropped 9.8 per cent to 685.22 million cubic meters. India's April-May oil production at 6.26 million tonnes was almost unchanged from the previous year. Gas output in the period dropped 5 per cent to 5.94 bcm.