Oil Prices Settle Lower Amid Libya and Iraq Tensions
West Texas Intermediate (WTI) and Brent crude oil prices posted modest declines during Tuesday’s session.
77彩票注册官网WTI for February delivery lost 20 cents Tuesday to settle at $58.34 per barrel. The light crude marker traded within a range from $57.68 to $59.73.
77彩票注册官网March Brent ended the day at $64.59 per barrel, reflecting a decline of 26 cents.
Oil prices finished lower despite recent reports that supplies from Libya could be dramatically curtailed.
77彩票注册官网“About 95 percent of Libya’s oil supply could be at risk, yet crude traders are barely alarmed, underscoring the market’s bigger worries over the mammoth recent builds in U.S. fuel supplies,” commented Barani Krishnan, senior commodities analyst at .
Krishnan explained that Libya’s National Oil Corp. reportedly has declared force majeure – a waiver on contractual obligations – on crude loadings out of the North African country.
“The force majeure follows the blockade on oil shipments at five Libyan ports by Khalifa Haftar, the warlord that Tripoli’s globally recognized government says could become the next Gaddafi,” said Krishnan. “As of Saturday, some 800,000 barrels per day (bpd) or more were estimated to have been disrupted in Libya, including 300,000 bpd from El Sharara, the country’s biggest oilfield. If unmitigated, the country’s output could fall to 72,000 bpd from a regular 1.2 million bpd.”
Remarking that crude markets are “shockingly unperturbed” by events in Libya, Krishnan noted the apparent complacency may stem from much higher-than-expected builds in U.S. gasoline and distillates inventories. He explained that in the past two weeks stockpiles of gasoline have risen by 15.7 million barrels and distillates by 13.8 million barrels against forecasts of 5.8 million barrels and 5 million barrels, respectively.
77彩票注册官网Vance Scott, Houston-based managing director in the energy practice at global, multi-industry consulting firm AlixPartners LLP, observed that another geopolitical hotspot of interest to the oil market is getting hotter: Iraq.
77彩票注册官网“(H)eretofore easing tensions in Iraq have been reawakened by security guards blocking access to the Al-Adhab oil field, located southwest of Baghdad, in efforts to secure long-term employment contracts – potentially impacting 70,000 to 90,000 bpd,” said Scott. “Additionally, anti-government protests in Basra stemming from frustration over basic government services, living standards and corruption resumed Sunday, potentially closing off another 50,000 barrels from the Basra Field.”
The flare-ups in Iraq appear not to have alarmed traders, he added.
77彩票注册官网“On Monday … markets seemed to recognize that available OPEC surplus capacity and the U.S. export capability driven from continued Permian growth can likely absorb potential Libyan and Iraqi disruptions – and pricing eased,” Scott noted.
77彩票注册官网Krishnan also pointed out the U.S. chief executive is contributing to the prevailing oil market sentiment.
77彩票注册官网“President Donald Trump, in Davos for the world economic summit, added to the bearish theme on Monday by describing the United States as being in an energy revolution that has ‘reawakened the powerful machinery of U.S. enterprise,’” said Krishnan. “If anything, it reveals the determination of his administration to encourage U.S. shale producers to crank out even more oil than the current record high of 13 million bpd in order to retain the country’s energy independence.”
Reformulated gasoline (RBOB) edged slightly downward Tuesday. February RBOB shed less than one cent, settling at nearly $1.64 per gallon.
Henry Hub natural gas fell more sharply than the rest of the petroleum complex. February gas futures lost 11 cents to close at $1.895.
“Traders seem to be trying to balance the upward demand pressures driven by colder weather in the U.S. Midwest and Northeast against the likely associated gas surplus should U.S. oil production increase to offset global supply disruptions,” said Scott.
To contact the author, email firstname.lastname@example.org.
WHAT DO YOU THINK?
77彩票注册官网 Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.