Brent Futures Fall as Libya Plans to Open Main Oil Ports

Brent crude fell, narrowing its premium to West Texas Intermediate to the least in a month, following reports that Libya will reopen its main oil ports.

Brent was little changed, after gaining as much as 1 percent earlier today. Brigadier Idris Bukhamada, head of the Petroleum Facilities Guard, said that Es Sider, Ras Lanuf and Zueitina ports will reopen Dec. 15. Crude stockpiles in the U.S. probably shrank by 3 million barrels last week, according to a Bloomberg News survey before a report from the Energy Information Administration tomorrow. OPEC reduced its output in November to the lowest level in more than two years.

“WTI is getting some fundamental support from expectations of U.S. crude inventories drawing for a second week running, while overheated Brent is pressured by anticipated higher North Sea loadings in January and the Libya news,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said by phone before the Libyan port announcement.

Brent for January settlement fell 6 cents to $109.33 a barrel at 1:43 p.m. in London on the ICE Futures Europe exchange. The volume of all futures traded was about 77 percent above the 100-day average.

WTI for January delivery rose as much as $1.40 to $98.74 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Oct. 21. It was at $98.28 as of 1:58 p.m. London time. Brent was at a premium of $10.99 to WTI and settled at $12.05 yesterday, the narrowest gap since Nov. 11 based on closing prices.

North Sea crude loadings are set to rise in January to the highest level since February 2012, shipping programs showed.

Forced Decision

The Al Magharba tribe, which lives on eastern coast, has “forced its decision” on former PFG regional commander Ibrahim Al Jedran and his armed men to reopen the Libyan ports, Bukhamada said today by phone from Ajdabiya.

The tribe and Al Jedran said at a joint press conference that they agreed on three conditions, including investigating alleged illegal oil sales, which the government must apply, while differing on the timing. Al Jedran said the government must meet these conditions or “we will have another opinion about reopening on Dec. 15.”

‘Rampant Supply’

Brent’s premium over WTI is set to narrow further in the coming months, Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in e-mailed note today.

The Organization of Petroleum Exporting Countries pumped 29.63 million barrels last month compared with 29.83 million in October, OPEC said in its monthly oil market report today, citing data from secondary sources. That’s the lowest since May 2011. The 12-nation group decided to maintain its output limit of 30 million at a meeting in Vienna last week.

“In taking this decision, member countries reconfirmed their readiness to promptly respond to unforeseen developments that could have an adverse impact on an orderly and balanced oil market,” OPEC said in today’s report.

Deutsche Bank AG cut its 2014 price forecasts for Brent to $97.50 a barrel and WTI to $88.75, both down about $10 from its 2013 estimate, according to an e-mailed note.

“Rampant U.S. oil supply growth and upside risks to Libyan and Iranian crude oil exports imply a bearish environment for global oil markets next year,” the bank said.

WTI surged 5.3 percent last week and the WTI-Brent spread tightened after U.S. crude inventories declined for the first time in 11 weeks and TransCanada Corp. announced plans yesterday to start filling its Keystone pipeline to the Gulf Coast from Cushing, Oklahoma, the delivery point for Nymex futures.

Utilization Rates

U.S. gasoline supplies probably gained 2 million barrels last week, according to the median of seven analyst estimates in the Bloomberg survey before data from the EIA, the Energy Department’s statistical arm. Distillate inventories, a category that includes heating oil and diesel, also rose by 2 million.

Refinery utilization rates increased 0.5 percentage points to 92.9 percent, the highest since July 2012, the survey shows. The industry-funded American Petroleum Institute is scheduled to release separate inventory data today.

TransCanada began injecting oil into the southern portion of the Keystone pipeline on Dec. 7, Shawn Howard, a spokesman based in Calgary, said in an e-mailed statement. The company will inject 3 million barrels in the coming weeks, he said.

The company estimates it will begin taking receipts and delivering oil via the line in mid- to late-January, a bulletin showed. The pipeline to Port Arthur, Texas, will have a capacity of 700,000 barrels a day.

To contact the reporters on this story: Konstantin Rozhnov in London at krozhnov@bloomberg.net; Mariam Sami in Cairo at msami2@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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