A worker at an oil field owned by Bashneft, Bashkortostan, Russia, in this January 28, 2015 file photo. REUTERS/Sergei Karpukhin/Files

NEW YORK – Oil prices slipped yesterday, further backing off from 2015 peaks hit earlier in the week as tension around northern Iraq following the Kurdistan region’s vote in favor of independence spurred fresh supply concerns.

Crude has risen sharply in the last two-and-a-half weeks as traders anticipated renewed demand from US refiners who were resuming operations after shutdowns due to Hurricane Harvey. Major world oil producers have also indicated that they will stick with output cuts to limit supply.

US crude has gained 9 percent in 14 trading days, with Brent up 7 per cent in that time. Both benchmarks are near overbought levels, based on an index of relative strength, which measures the speed and magnitude of price movements.

“We’ve made a really impressive run here and I do think we’re due for a pullback,” said Robert Yawger, director of energy futures at Mizuho in New York.

US crude settled down 58 cents, or 1.1 per cent, to US$51.56 (RM217.43) a barrel after reaching a five-month intraday high of US$52.86.

Brent ended down 49 cents, or 0.9 per cent, at US$57.41 a barrel, after hitting a more than two-year high of US$59.49 on Tuesday after Monday’s referendum vote prompted Turkey to threaten to close the region’s oil pipeline.

Iraqi Kurdistan voted overwhelmingly in favour of independence, prompting Turkish President Tayyip Erdogan to say he could use force to prevent the formation of an independent Kurdish state and might close the oil “tap.”

“Kurdistan and northern Iraq now export 500,000-550,000 barrels per day (bpd). That would be a big loss to the market,” said Tamas Varga, analyst at brokerage PVM Oil Associates.

Turkey promised yesterday to deal only with the Iraqi government on crude, the office of Iraqi Prime Minister Haider al-Abadi said.

Brent’s premium over US crude widened to a more than two-year high this week, in part due to reduced demand stemming from Harvey.

Yawger noted that a sharp drawdown in US distillate inventories — diesel and heating oil — ahead of the busy winter season should spur demand for crude in coming weeks, keeping any selloff modest.

“I tend to believe there’s some good fundamentals here. The Opec situation should keep Brent relatively elevated, and the distillate situation is so far behind the eight-ball that the margin is trading at US$25,” he said.

The heating oil crack spread, a measure of the profit margin for refining crude into diesel or heating oil, fell to US$24.97 yesterday. Diesel inventories in the United States are currently 7 per cent below the seasonal average during this decade, according to the US Energy Department.

— Reuters