Oil prices fall despite Iraq attacks

WASHINGTON — Oil futures dropped by nearly $1 per barrel Monday despite pipeline sabotage in Iraq that has delayed exports from a southern port — reinforcing the view among traders that prices had risen too fast earlier this summer.

“It just goes to show you that when the psychology turns, it turns,” said Tom Bentz, a trader at BNP Paribas Futures in New York.

Light sweet crude for October delivery plunged 90 cents to $42.28 on the New York Mercantile Exchange. Crude futures are at their lowest level since July 27 and roughly 14 percent below the record settlement high of $48.70 on Aug. 19.

Oil markets have been extremely volatile this summer because traders fret there is inadequate supply globally in the event of a prolonged output disruption in Iraq, Russia or Venezuela.

But with the exception of sporadic dropoffs in Iraqi oil exports due to attacks on industry infrastructure, none of these fears have materialized.

Oil-price speculation by institutional investors, including hedge funds, magnified this summer’s surge in prices, as well as the latest retreat, traders said.

Also on Monday, OPEC’s president said the cartel was “doing everything it can to restore and stabilize oil prices.”

Paradoxically, that too might have contributed to higher prices earlier in the month, since many market participants believe the Organization of Petroleum Exporting Countries has very little excess production capacity with which to calm jittery markets.