Brent and West Texas Intermediate crudes fell to three-week lows as rebels in Libya said two oil ports they have held for a year are free to reopen.
The ports of Es Sider and Ras Lanuf, the nation’s largest and third-largest, can ship crude again in a gesture of support for the newly elected parliament, Ali Al-Hasy, spokesman of the self-declared Executive Office of Barqa region, said today. WTI dropped after rising 0.2 percent earlier as an Energy Information Administration report showed U.S. inventories decreased more than expected.
“Reports that we may have two export terminals reopen in Libya are adding to the pressure,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Going forward, geopolitical risk is still the primary driver.”
Brent for August settlement dropped $1.05, or 0.9 percent, to end at $111.24 a barrel on the London-based ICE Futures Europe exchange, the lowest since June 11. The volume of all futures was 69 percent more than the 100-day average for the time of day.
WTI for August delivery fell 86 cents, or 0.8 percent, to $104.48 a barrel on the New York Mercantile Exchange, also the lowest since June 11. Volume was about 6.2 percent above the 100-day average. Brent closed at a premium of $6.76 to WTI versus $6.95 yesterday.
Es Sider and Ras Lanuf, which have combined capacity of 560,000 barrels a day, will reopen today, Al-Hasy said by phone. Libya’s state-run National Oil Corp. hasn’t been informed of the move, according to Mohamed Elharari, a company spokesman.
The rebels are seeking self-rule for the eastern region of Libya known also as Cyrenaica. They occupied oil ports in the region at the end of July 2013, demanding a revenue-sharing agreement to make up for the neglect the area experienced under Muammar Qaddafi’s 42-year rule. Libya is now producing 320,000 barrels a day, or about a fifth of its output before Qaddafi was overthrown in 2011, according to National Oil Corp.
“Some of the softness is a response to the opening of two oil ports in Libya,” said Adam Wise, who helps run a $6 billion oil and gas bond portfolio as a managing director at John Hancock in Boston.
WTI rose earlier after the EIA reported that U.S. crude-oil supplies dropped 3.16 million barrels in the week ended June 27 to 384.9 million, the lowest since April 4. Analysts surveyed by Bloomberg expected a decline of 2.4 million. Refineries boosted their operating rate to 91.4 percent, the highest in five months.
“The draw occurred as refineries operated at near 91.5 percent of capacity and demand was strong,” Wise said.
Petroleum consumption climbed 626,000 barrels a day last week to 19.4 million, according to the Energy Department’s statistical unit. Gasoline demand rose 355,000 to 9.17 million.
“We are going to continue to see crude draws as long as refineries are running at such a high rate,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Demand’s been growing.”
Supplies at Cushing, Oklahoma, the delivery point for WTI futures, decreased 1.36 million barrels to 20.5 million. Gasoline inventories fell 1.24 million to 213.7 million. Gasoline supplies were expected to expand by 550,000 barrels, according to the Bloomberg survey.
“The draw in Cushing is much higher than people anticipated,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC. “If they get the flows out of Libya’s ports, that can really add to crude supplies in Europe. It really takes the edge off Brent versus WTI in a big way.”