Oil dips to $106 on renewed flows from Iraq pipeline

Oil prices fell to $106 Friday morning on word that oil flows from a southern pipeline hit by saboteurs had resumed, Bloomberg News reported.

Oil fell $1.50 to $106.08 per barrel in early trading Friday. The other major energy commodities also retreated on the news. Heating oil fell about 4 cents to $3.10 per gallon, unleaded gasoline declined about 2 cents to $2.70 per gallon, and natural gas rose fell 2 cents to $9.70 per million BTUs.

Iraqi oil flows through the country's southern pipeline system to the Basra export terminal returned to normal at about 10 p.m. local time Thursday, an oil official said, Bloomberg News reported Friday.

One of Iraq's two main oil export pipelines near the southern city of Basra was blown up by saboteurs on Thursday. The pipeline transports oil from the Zubair oil field to the Al-Faw storage facility, where it is exported.

Oil Analysis: Prior to the Iraq incident, oil had been corrected to the $100 range, on likely lower oil demand and gasoline consumption stemming from the U.S. economic slowdown, and from record-high gasoline prices. However, two incidents this week, the Iraq pipe attack and a below-consensus weekly U.S. oil inventory report, caused a sudden reversal and a $7 spike in oil prices. Assuming bearish fundamentals remain the same -- and there are no further disruptions to supply globally -- traders now expect oil to resume its downward track as the spring season progresses.