Oil price makes gains as Iraq violence rages

June 17:

Gas pipeline station workers walk past the gas pressure engines in Zakarpattia region, Western Ukraine, 15 kms on border with Slovakia in Uzhgorod, Ukraine.(AP Photo/Sergei Chuzavkov)

NEW YORK: Oil prices rose Monday after advances by Sunni insurgents in Iraq raised concerns over potential disruption to crude supplies, while the escalating violence in Iraq and renewed tensions in Ukraine drove a shift into safe-haven currencies and bonds.

Fighting in Iraq and Ukraine dampened global equity markets, even though merger activity offset some declines on Wall Street.

Investor unease hit the Nikkei early in the day when Tokyo suffered its biggest fall in a month, while European shares were in the red for the third time in four days.

Russian natural gas exporter Gazprom reduced supplies to Ukraine Monday after Kiev failed to meet a deadline to pay off its gas debts in a dispute that could disrupt supplies to the rest of Europe.

“There was a reasonable flight-to-quality bid overnight with the developments in Iraq and Gazprom, so global equities were under a fair amount of pressure and that gave a bid to longer-dated Treasuries,” said Ian Lyngen, senior government bond trader at CRT Capital in Stamford, Connecticut.

MSCI’s all-country world equity index edged down 0.14 percent.

The FTSEurofirst 300 index of top European shares pared some losses but was still down 0.35 percent. The Dow Jones industrial average fell 40.52 points, or 0.24 percent, at 16,735.22.

The Standard & Poor’s 500 Index was down 3.29 points, or 0.17 percent, at 1,932.87.

The Nasdaq Composite Index was down 9.91 points, or 0.23 percent, at 4,300.74. Brent crude for August delivery was up 54 cents at $113.00 a barrel. U.S. oil was up 7 cents at $106.98 a barrel.

The yen and the Swiss franc rose, with the Japanese currency hitting a four-month high against the euro as investors sought safety from Iraq and a gas dispute between Russia and Ukraine.

The dollar slipped as traders await for clues from the U.S. Federal Reserve on the timing of an interest rate increase amid doubts about the economic recovery.

The dollar fell 0.16 percent to 101.89 yen, while the euro fell to a four-month low against the yen before paring much of its decline, last at 138.17 yen in U.S. trading.

The dollar and euro were also weaker against the Swiss franc, another safe-haven currency, trading at 0.8977 francs and 1.2176 francs respectively.

U.S. Treasury prices rose as Iraq and Ukraine increased demand for safe-haven bonds, though solid U.S. economic data limited gains.

Meanwhile, benchmark 10-year notes were last up 3/32 in price to yield 2.5934 percent

Source: http://www.dailystar.com.lb/Business/International/2014/Jun-17/260359-oil-price-makes-gains-as-iraq-violence-rages.ashx?#axzz34q9xUEfP