Oil gains as Libyan crude drop offsets what Opec curbs couldn't

Author

31 March, 2017

There's a high possibility that OPEC's production deal will be extended.

Meanwhile, Nigeria's crude oil exports are set to rise to 1.66 million bpd in May, according to a loading programme compiled by Reuters on Tuesday.

Russian Federation has promised to cut output by 300,000 bpd.

"The market can expect another build on crude (inventories) when EIA release their figures later", said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

US 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.

The news sparked some optimism among traders, but that will be short-lived unless OPEC decides to extend its production cut agreement into the second half of the year.

Libya's output was said to fall to about 500,000 barrels a day after a pipeline carrying crude from the Sharara field - its biggest - stopped operating. U.S. crude stocks rose by 1.9-million barrels to 535.5-million barrels, while gasoline and distillate stocks declined, the American Petroleum Institute said.

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Oil prices settled at a roughly one-week high Tuesday, buoyed by disruptions to Libyan crude production and talk of a six-month extension to an OPEC-led pact to limit global output.

Opec member Libya was excluded from the cuts, agreed late a year ago, as the country's oil sector fell victim to the unrest that followed the toppling of Muammar Gaddafi in 2011.

Front-month Brent crude futures, the worldwide benchmark for oil, rose 29 cents, or 0.6 percent, to $51.62 per barrel by 0653 GMT. Year to date, WTI crude futures trade down by around 10%.

USA crude West Texas Intermediate (WTI) futures ended up US$1.14 cents, or 2.4 per cent, at US$49.51 a barrel after peaking on the data at US$49.54, also the highest since March 16.

Meanwhile, UAE's Oil Minister Suhail Al-Mazrouei said that the current glut is a result of seasonal factors in the US: it is refinery maintenance season and crude oil stockpiles are increasing.

The impact of this production curb was largely ineffective due to rising United States production during the same time.

Russian Federation and 10 other non-OPEC producers have agreed to jointly cut by an additional 600,000 barrels per day.


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