Brent crude traded near the lowest price in more than three weeks as Libya prepared to increase exports from two ports closed for a year. West Texas Intermediate fell for a seventh day, its longest slide since December 2009.
Futures dropped as much as 0.2 percent in London before rebounding. Libya, the holder of Africa’s biggest crude reserves, has 7.5 million barrels of oil in storage and ready to export from the Es Sider and Ras Lanuf terminals after ending force majeure yesterday, 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 than three-quarters of its output.
“Libya is finally set to return to the market, and the oil price reflects that,” Jens Naervig Pedersen, an analyst at Danske Bank A/S in Copenhagen, said by phone. “We could see the Iraq premium decline in the future as risk is limited to supplies from the main production sites in the south.”
Brent for August settlement fell as much as 24 cents to $110.40 a barrel on the London-based ICE Futures Europe exchange, the lowest since June 12. It was little changed at $110.69 at 1:24 p.m. in London. The volume of all futures traded was 2 percent below the 100-day average for the time of day.
WTI for August delivery was at $103.92 a barrel in electronic trading on the New York Mercantile Exchange, 14 cents lower than the July 3 close. The seven-day drop is the longest slide since a nine-day decline ended Dec. 14, 2009. There was no floor trading during the Fourth of July holiday, and transactions will be booked today for settlement purposes. The U.S. benchmark traded at a discount of $6.78 to Brent on ICE.
WTI briefly pared some of its loss after a 7.1 magnitude earthquake struck west of Tapachula, Mexico. No damage or injuries have been reported so far in Mexico City, Mayor Miguel Mancera said in comments on his Twitter page.
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.
Hedge funds and other money managers cut net bullish bets on Brent from a record in the week to July 1, according to data from ICE Futures Europe. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 235,787 lots, the London-based exchange said today in its weekly Commitments of Traders report.
Es Sider holds 4.5 million barrels of crude in storage and Ras Lanuf contains 3 million, Oil Ministry Measurement Director Ibrahim Al-Awami said by phone today. “All the oil in storage at Es Sider and Ras Lanuf is ready for export,” he said.
Es Sider can load 340,000 barrels a day while Ras Lanuf can handle 220,000 barrels, according to the Oil Ministry. Libya pumped 300,000 barrels a day last month compared with 1.13 million in June 2013, ranking it as 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 in June and declared a caliphate in Iraqi and Syrian territory it controls.
“Oil is likely to remain flat,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “You’ve got Libyan supply coming back and nothing seems to have happened in the south of Iraq.”