NEW YORK (MarketWatch) — The price gap between the Brent and WTI oil futures widened further Wednesday as traders weighed bearish U.S. supply data and a hint of quicker Federal Reserve rate hikes against continued strife in Iraq.

Nymex WTI crude oil for July delivery CLN24, , the U.S. benchmark, fell 39 cents, or 0.4%, to settle at $105.97 a barrel, adding to a 54-cent loss on Tuesday. Oil extended losses after the Fed said it expects interest rates to rise at a slightly faster pace in 2015 and 2016.

On the ICE exchange, Brent oil for August delivery UK:LCOQ4, which is the most sensitive to developments in Iraq, rose 85 cents, or 0.7%, at $114.30 a barrel, hitting its highest level in nine months as Sunni militants and Iraqi government forces battled for control of the nation’s largest refinery.

Two fuel-storage tanks were in flames after hours of fighting that began before dawn Wednesday as ISIS militants attacked the facility with mortars and machine guns, The Wall Street Journal reported, citing a state oil official. Meanwhile, government gunships bombarded the militants’ positions, the report said.

The attack “shows that the situation in Iraq is not getting better,” said Phil Flynn, senior market analyst at Price Futures Group. “Oil companies are pulling out nonessential personnel even in the south of the country…Oil companies are trying to export while the exporting is good yet the possibility of an oil shock is rising [if] the south of Iraq starts to fall.” See: Why traders may be overconfident about Iraq’s oil exports

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President Barack Obama was set to meet with congressional leaders on Wednesday, but has ruled out immediate airstrikes for now.

Meanwhile, the International Energy Agency said Tuesday it now expects Iraq’s oil output to grow by only 1.3 million barrels a day to 4.5 million barrels a day by 2019. Read: The real reason oil traders worry about Iraq.

In other action in the energy complex, natural-gas futures for July US:NGN14 fell 5 cents to $4.66 per million British thermal units. July gasoline US:RBN4 rose by around a penny to $3.10 a gallon and heating oil US:HON4 gained 2 cents at $3.04 a gallon.

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