Crude Rises on North Sea Disruption, Libya Port Shutdown

West Texas Intermediate crude rose with Brent as North Sea production was curtailed and Libya shut its biggest oil export terminal. Brent’s premium over WTI widened for a sixth time in seven days.

Futures advanced for a second day as a compressor breakdown at the Ula platform reduced production of Ekofisk crude, a spokesman with BP Plc (BP/), the platform’s operator, said today. Libya shut the Es Sider port after opening yesterday. WTI slipped to $105.03 in intraday trading on reports that Japan’s (JGDPAGDP) growth slowed to 2.6 percent in the second quarter.

“We’ve got supply issues in the North Sea and Libya,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The market momentum is higher. $105 is an important support level.”

WTI for September delivery gained 14 cents to settle at $106.11 a barrel on the New York Mercantile Exchange. Trading was 15 percent below the 100-day average for the time of day at 2:37 p.m.

Brent for September settlement gained 75 cents, or 0.7 percent, to end the session at $108.97 a barrel on the London-based ICE Futures Europe exchange. Volume was 1.9 percent below the 100-day average. The European benchmark’s premium to WTI widened to $2.86 a barrel from $2.25 on Aug. 9.

Production of Ekofisk was curtailed as a “gas turbine powering a compressor at Ula had a breakdown as of Wednesday evening August 7,” Jan Erik Geirmo, a BP spokesman in Stavanger, Norway, said in an e-mail today. The affected fields were producing 8,000 barrels a day, according to estimates by the Norwegian Petroleum Directorate.

‘Pushing Higher’

“More than anything, the North Sea disruption is pushing oil higher,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “On top of that, we have issues in Libya.”

The brief opening of Es Sider allowed two tankers to berth at the facility and they may be turned away tonight if no crude loadings occur, the port coordinator, Captain Abu Ejela Al Zanati, said today by phone. Six more vessels are anchored outside the port.

Es Sider has been closed since July 28 amid protests by the Petroleum Facilities Guard, which is pressing for better working conditions. Interruptions at ports and other installations across Libya lowered the country’s oil production to 800,000 barrels a day in July, half the level of the post-revolution peak a year earlier, according to a Bloomberg survey of output from OPEC members.

Japan Growth

WTI fell in early trading as Japan’s gross domestic product rose an annualized 2.6 percent, down from 3.8 percent the prior quarter, the Cabinet Office said.

Second-quarter growth in Japan, the third-largest oil-consuming country, was slower than the 3.6 percent gain predicted by 32 economists in a Bloomberg survey. The U.S. and China are the top two oil users.

“Japan is clearly the headline,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “That’s probably having a little bit of a damp on crude.”

Bijan Namdar Zanganeh pledged to raise Iran’s output if he becomes the country’s oil minister. Zanganeh, a former Iranian oil minister nominated by President Hassan Rohani to take the post, said his “first action will be to bring the country’s oil production capacity back to 2005” levels, according to Shana, the oil ministry’s news website.

Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, has slipped to sixth place, producing 2.56 million barrels a day in July, according to a Bloomberg survey of producers and analysts. Its 2005 production averaged almost 4 million barrels a day.

‘Ease Tension’

Rohani “is going to ease tension rather than raise it,” O’Grady said. For oil prices, “to move higher you are going to need some kind of outside catalysts such as more geopolitical tension.”

Implied volatility for at-the-money WTI options expiring in October was 21.8 percent, up from 21.6 percent on Aug. 9, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 481,477 contracts as of 2:46 p.m. It totaled 690,133 contracts on Aug. 9, 5.5 percent above the three-month average. Open interest was a record 1.93 million contracts.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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