Oil climbs as Libyan pipeline disruption eases crude oversupply
HONG KONG (Bloomberg) -- Oil prices rose after a pipeline halt reduced output in OPEC member Libya, countering concerns that a U.S. surplus shows little sign of diminishing.
Libya’s output was said to fall to about 500,000 bpd after a pipeline carrying crude from the Sharara field -- its biggest -- stopped operating. Clashes between armed groups in the nation have previously led to market disruptions, and the latest news drove New York oil futures up as much as 1% after boosting them 1.3% on Tuesday. Prices are headed for two straight days of gains for the first time in more than a month.
The production drop in Libya, which was pumping 700,000 bpd before the pipeline halt, is at least temporarily easing concern that rising U.S. supply is offsetting the effect of curbs by OPEC and its allies.
U.S. industry data on Tuesday was said to show crude inventories climbed last week, and a government report Wednesday is also forecast to show stockpiles expanded. Six OPEC nations have joined with non-member Oman to voice support for prolonging their output cuts past June.
“The global oil market is now in deficit because of production curbs by OPEC and Russia,” said Giovanni Staunovo, an analyst at UBS Group in Zurich. “For investors with a higher risk appetite, we regard current oil prices as a buying opportunity for outright long positions.”
WTI for May delivery was at $48.76/bbl on the NYME, up $0.39. Total volume traded was about 35% below the 100-day average. The contract gained $0.64 to $48.37 on Tuesday.
Brent for May settlement was up $0.51 at $51.84/bbl on the Europe exchange, and traded at a $3.07/bbl premium to WTI. Brent climbed $0.58, or 1.1%, to $51.33 on Tuesday.
Oil Market News
U.S. crude stockpiles rose by 1.91 MMbbl last week, the API was said to report Tuesday; EIA data Wednesday is forecast to show inventories increased by 2 MMbbl. OPEC is likely to extend its supply accord beyond June as crude inventories haven’t been falling as fast as expected, according to Vitol Group, the world’s biggest independent oil trader.
