The militants, who began a lightning offensive last month, have yet to directly threaten the key oil-producing region in Iraq's south. "The market continues to suffer from extended profit taking and little new developments on the geopolitical front, while global supplies and OPEC's spare production capacity are under no immediate threat for now," said VTB Capital analyst Andrey Kryuchenkov.
Yawger said there was speculation that the storm, which is expected to strengthen, could move along the East Coast and curtail driving over the long weekend, killing gasoline demand instead of "the holiday extravaganza that was forecast.
World oil prices have slipped on profit taking and marginally easing concerns about the Iraq crisis, while in the US a storm sparked fears about lower gasoline demand.
Bob Yawger of Mizuho Securities said the market was watching Tropical Storm Arthur, the first named storm of the Atlantic hurricane season, as it moved off the coast of Florida ahead of the Independence Day holiday Friday.
Read more here: Business Spectator