Oil prices down as Turkey fears ease, glut woes return

Oil prices extended their decline in Asia Tuesday as the global glut returned to focus, while worries about the effects of Turkey’s coup on shipments also eased.

Turkey is a strategic conduit for shipments from Russia and Iraq to the Mediterranean and there had been fears that the bid to grab power by a military faction at the weekend would disrupt flows.

The coup, however, was quickly crushed.

At around 0340 GMT, US benchmark West Texas Intermediate fell 18 cents, or 0.40 percent, to $45.06 and Brent fell 14 cents, or 0.30 percent, to $46.82.

After topping $50 in early June on the back of unrest in key African producer Nigeria and wildfires in Canada`s key crude region, prices have been falling as the crises eased.

The Turkish Straits, including the Bosphorus and Dardanelles, are among the world’s major choke points for seaborne crude, with about 2.9 million barrels of oil passing through daily in 2013.

No shipments have been stopped since large tankers were barred from sailing in the Bosphorus waterway near Istanbul for several hours on Saturday, Bloomberg News reported, quoting a port agent.

Analysts said however that downside risks for prices remain.

‘Global inventories remain very high, and the potential impact of growing Iranian exports, Saudi-Iranian competition for market share and weaker global economic growth are some of the factors that could cause oil prices to slip from their current level,’ Moody’s Investors Service said in a note.

‘Our medium-term outlook (for oil prices) remains unchanged, and we continue to view this as a challenging time for oil market participants.’

Output from the Organization of the Petroleum Exporting Countries climbed 300,000 barrels per day in June, close to an eight-year high of 32.73 million, according to Energy information provider S&P Global Platts.