West Texas Intermediate crude fell for a seventh day, extending the longest stretch of losses since December 2009. Brent slipped to the lowest close in more than three weeks as Libya prepared to increase exports from two ports closed for a year.
Libya has 7.5 million barrels of oil ready to export from the Es Sider and Ras Lanuf terminals after ending force majeure, the country’s Oil Ministry said today. The Islamist insurgency in Iraq, OPEC’s second-largest producer, hasn’t spread to the south, the source of most of the country’s output. Futures also dropped after U.S. equities fell from a record.
“The Libya situation has added to the downward pressure on the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’ve given back all of the Iraq security-fear gains that were added in June.”
WTI for August delivery fell 53 cents, or 0.5 percent, to close at $103.53 a barrel on the New York Mercantile Exchange. It was the lowest settlement since June 6. The seven-day drop is the longest slide since a nine-day decline ended Dec. 14, 2009. The volume of all futures traded was 29 percent below the 100-day average at 2:49 p.m.
There was no floor trading in New York during the Fourth of July holiday, and electronic transactions will be booked today for settlement purposes.
Brent for August settlement fell 40 cents, or 0.4 percent, to end the session at $110.24 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since June 11. The European benchmark closed at a $6.71 premium to WTI, down from $6.94 on July 3.
Brent briefly slipped below $110, reversing a rally that started when Islamist militants seized the northern Iraqi city of Mosul almost a month ago.
Brent declined 2.4 percent last week, erasing this year’s gains, as rebels seeking self-rule in Libya’s east agreed to surrender the Es Sider and Ras Lanuf ports, the nation’s biggest and third-largest oil-export terminals. The government in Tripoli has instructed National Oil Corp. to start marketing supplies from the two facilities, Mohamed Elharari, a spokesman for the state-run company, said by phone yesterday.
Es Sider holds 4.5 million barrels in storage and Ras Lanuf contains 3 million, Oil Ministry Measurement Director Ibrahim Al-Awami said by phone today. The ports can export a combined 560,000 barrels a day, the Oil Ministry said. Libya pumped 300,000 barrels a day last month, down from 1.13 million in June 2013, making it the smallest producer in the Organization of Petroleum Exporting Countries, data compiled by Bloomberg show.
In Iraq, fighting remains concentrated in the north, where insurgents from a breakaway al-Qaeda group known as the Islamic State captured the city of Mosul on June 10. The group declared a caliphate in Iraqi and Syrian territory it controls on June 29 and said it was changing its name from the Islamic State in Iraq and the Levant, or ISIL.
U.S. equities declined as Goldman Sachs Group Inc. revised its forecast for the Federal Reserve to raise interest rates to the third quarter of 2015, rather than the first three months of 2016, saying the economy is “accelerating to an above-trend pace.”
“There’s speculation that the U.S. stock market has peaked,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “That concern is spreading to other markets.”
Gasoline fell as much as 1.3 percent after Hurricane Arthur swept up the East Coast during the Fourth of July holiday, reducing driving demand.
“The worst-case scenarios didn’t happen over the holiday weekend, so there’s a bit of relief,” said Phil Flynn, a senior market analyst at the Price Futures Group in Chicago. “Gasoline seems to be leading the way lower.”
Gasoline for August delivery dropped 3.08 cents, or 1 percent, to $2.989 a gallon in New York, the lowest settlement since June 10.
Diesel for August delivery slipped 1.39 cents, or 0.5 percent, to $2.9145 on the Nymex. It was the lowest close since June 11.
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