NEW YORK – Oil prices extended a two-week slide Tuesday as expectations of rising global supply countered news of a sabotage attack in Iraq that shut the country's main southern export terminal.
Oil prices have fallen more than 12 percent from record highs since early June after producer group OPEC (search) pledged to ramp up production to cool the sizzling market, which experts warned threatened economic growth.
OPEC decided to increase production quotas by two million barrels-per-day (bpd) from July 1 and by another 500,000 bpd from August 1, but tanker-tracker Petrologistics (search) said this week some 800,000 bpd of extra oil is expected in June.
That would bring OPEC production to its highest level in nearly four years, a welcome prospect for big consumer nations like the United States, which is in the early weeks of peak-demand summer driving season.
The losses on Tuesday came despite attacks on one of the two main trunk pipelines from Iraq's southern oilfields feeding the main export terminal of Basra.
Iraqi Oil Minister Thamir Ghadhban told Reuters that officials were assessing the impact of the attacks on export levels, but local shipping agents said deliveries to Basra were cut off, with one of the pipelines badly damaged.
A separate crude oil pipeline in northern Iraq caught fire after an explosion later in the day, Iraq's North Oil company said. An official said it was probably sabotage.
The attacks underscored concerns in the oil markets that militants were increasingly targeting oil infrastructure in the Middle East, raising the specter of a severe disruption to shipments from the energy-rich region.
"In recent weeks, news like this could sweep the market much higher, but now you are seeing people selling into rallies," said Jim Ritterbusch, president of Ritterbusch and Associates.
Analysts said that buying has become more cautious due to the prospect of more OPEC oil shipments, and speculative investors have been liquidating some of their long positions.
For the next indication of the health of U.S. inventory levels, the market is awaiting government data Wednesday, which is forecast to show a rise of 1.55 million barrels in U.S. crude stocks.
A Reuters poll of eight analysts also predicted U.S. gasoline stocks would increase by 1.4 million barrels as U.S. refineries ramp up production to meet summer vacation demand.