LONDON: Brent crude oil fell on Thursday, as fears over conflict causing export disruption from Iraq, OPEC's second-largest producer, eased further.
Disappointing economic data from the United States also put pressure on prices.
Oil hit a nine-month high a week ago on fears that conflict in Iraq could split the country and hit oil exports, but it has since retreated as production has been largely unaffected by the fighting.
Iraq's southern oilfields, which produce most of the nation's 3.3 million barrels a day, remained safe, said Nickolay Mladenov, United Nations special envoy to Iraq.
But insurgents and Iraqi government forces continued to fight on Wednesday for control of the country's largest refinery, the 300,000-barrels-per-day Baiji complex, with troops being airlifted into the site by helicopter.
Andrey Kryuchenkov, an analyst at VTB Capital said there is a $5 to $8 per barrel of Brent's price attributable to geopolitical risk and worries over the loss of Iraqi oil, and that this was here to stay in the short run.
There is a chance that prices will spike higher, he added.
"We still see a fairly low probability of a complete takeover (by militants in Iraq). However, should supplies be threatened, prices could spike beyond $115 and rally on to $120 if the conflict spreads to the producing facilities in the south."
Brent crude oil had fallen 47 cents to $113.53 a barrel by 1325 GMT, after hitting its highest since September at $115.71 last Thursday. It traded below $110 per barrel for most of early June.
Militants attacked one of Iraq's largest air bases and seized control of several small oilfields on Wednesday as U.S. special forces troops and intelligence analysts arrived to help Iraqi security forces counter the mounting Sunni insurgency.
However, there were hopes that oil exports could increase from Kurdistan, which would counter any potential slowdown of shipments from the south.
Iraq's self-ruling Kurds outlined plans on Wednesday to ramp up oil exports now that their forces have seized control of Iraq's main northern oilfields.
Putting further pressure on prices, oil output in Libya rose to 300,000 bpd after the El Feel field increased production .
U.S. crude fell 34 cents to $106.16 a barrel. It had gained 47 cents in the previous session on news Washington would allow exports of condensate, an ultra-light oil, in a marginal relaxation of a 40-year ban on U.S. oil exports.
Enterprise Products Partners, one of two companies given Department of Commerce approval on Tuesday to export condensate, said it could start exporting any time.
DATA DISAPPOINTS
Michael Hewson, analyst at CMC Markets said disappointing economic data from the United States in the previous session was helping to cap oil prices.
U.S. consumer spending rose less than expected in May, likely held back by weak healthcare spending, which could prompt economists to temper their second-quarter growth estimates.
"Global growth remains weak so there are no demand factors pulling us higher," Hewson said
However there was some slightly more optimistic news from Europe for the demand outlook.
Germany's economy will grow by 2 percent this year, Ifo institute said on Thursday, slightly raising its previous forecast on expectations that companies will invest more again and drive domestic demand.
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