Brent crude fell to its lowest intraday level in almost three weeks as rebels in eastern Libya said two oil ports, including the country’s biggest, are free to reopen. West Texas Intermediate dropped before U.S. supply data.
Futures declined as much as 0.8 percent in London to $111.41 a barrel. The ports of Es Sider and Ras Lanuf are free to resume shipments, Ali Al-Hasy, spokesman of the self-declared Executive Office of Barqa region, said today. The restart would expand Libya’s export capacity by 500,000 barrels a day and probably send Brent down to $110, Commerzbank AG said.
“Most of the big moves in the market we have seen this year have been on the back of news from Libya,” Jens Naervig Pedersen, an analyst at Danske Bank A/S in Copenhagen, said by e-mail. “The market could be starting to focus more on the potential downside risks to the oil price.”
Brent for August settlement traded for $111.68 at 1:28 p.m. local time, down 61 cents. The premium of the front-month Brent contract to the second shrank to as little as 7 cents a barrel, the least since April 15. The European benchmark crude traded at a premium of $6.65 to WTI on ICE, compared with $6.95 yesterday.
WTI for August delivery was at $104.92 a barrel in electronic trading on the New York Mercantile Exchange, down 42 cents. The contract slid to $105.34 yesterday, the lowest close since June 11. The volume of all futures traded was about 19 percent below the 100-day average for the time of day. Prices have gained 6.6 percent this year.
The Es Sider and Ras Lanuf terminals are “in very good shape” and “ready to operate,” rebel spokesman Al-Hasy said. Their reopening is intended to welcome Libya’s newly elected parliament, he said. The government has agreed to pay salaries of the Petroleum Facilities Guard members who had defected to the Barqa group during the ports blockade, he added.
Libya’s National Oil Corp. has yet to receive confirmation of an agreement, spokesman Mohamed Elharari said by phone.
“There have frequently been similar announcements without words ever being followed by actual deeds,” Carsten Fritsch, an analyst at Commerzbank in Frankfurt, said in a report. “Things could be different this time around, in which case the Brent price would probably fall sharply.”
U.S. crude inventories probably shrank by 2.4 million barrels to 385.7 million in the week ended June 27, while gasoline supplies expanded by 550,000 barrels, according to the median estimate of 10 analysts surveyed before the EIA report. The peak driving season typically starts on Memorial Day, which was May 26 this year, and runs through Labor Day on Sept. 1.
Forecasts for fuel inventory increases in the EIA report “balance out” the impact of estimated crude stockpile declines, Andrey Kryuchenkov, an analyst at VTB Capital in London, said by e-mail.
Tropical Storm Arthur is forecast to strengthen into a hurricane within two days and threaten North Carolina’s Outer Banks, where tourists are visiting for the Fourth of July holiday. The storm was 100 miles east-northeast of Cape Canaveral, Florida, with maximum sustained winds of 60 miles per hour, according to the Miami-based National Hurricane Center.
In Iraq, lawmakers yesterday failed to end an impasse over picking a prime minister and filling key posts. Political rifts are hindering efforts to curb an Islamist insurgency that has sparked concern of a civil war.
Brent climbed 2.7 percent in June, the most in 10 months, as fighters from a breakaway al-Qaeda group, now known as the Islamic State, captured the northern city of Mosul and advanced south toward Baghdad. Iraq pumped 2.9 million barrels a day of oil last month, making it the second-largest producer in the Organization of Petroleum Exporting Countries.