Brent Crude Resumes Declines on Recovering Production From LibyaGrant Smith
Brent crude resumed declines amid recovering output from Libya, holder of Africa’s biggest crude reserves.
Brent lost as much as 0.6 percent in London. Protestors who had threatened to close Libya’s second-biggest oilfield, Sharara, said they are content with government response to their demands, and that the field is operating normally. Output from the country recovered to about three times last month’s levels, according to the government. West Texas Intermediate fell after rallying 1.7 percent yesterday when government data showed crude inventories fell to the lowest level since March 2012 in the U.S., the world’s biggest oil consumer.
“There’s some more oil out of the west side of Libya, it seems the local protestors have managed to agree with the government,” said Bjarne Schieldrop, the chief commodities analyst at SEB AB in Oslo. “It’s looking fairly sideways, the direction is fairly balanced” for prices over the next two months.
Brent for February settlement, which expires today, fell as much as 69 cents to $106.44 a barrel on the London-based ICE Futures Europe exchange. The more-active March contract slid as much as 72 cents to $105.55. The European benchmark crude was at a premium of $12.72 to WTI, compared with $12.96 yesterday.
WTI for February delivery was at $93.95 a barrel in electronic trading on the New York Mercantile Exchange, down 22 cents. The contract rose $1.58 to $94.17 yesterday, the highest close since Jan. 2. The volume of all futures traded was 7 percent below the average for the past 100 days, according to data compiled by Bloomberg. WTI dropped 4.5 percent in 2014, its worst start to any year since 2009.
In Libya, operations have returned to normal at the Sharara field as protesters are satisfied with the government’s response to their demands, said Mustafa Lamin, a spokesman for the group. The country’s production has risen to about 600,000 barrels a day this week, from 210,000 barrels a day in December, after work resumed at Sharara on Jan. 4, according to state-run National Oil Corp.
U.S. crude stockpiles slid by 7.66 million barrels to 350.2 million in the seven days ended Jan. 10, according to the Energy Information Administration, more than five times a 1.3 million drop forecast in a Bloomberg News survey.
Inventories shrank as imports decreased 13 percent last week, the most since September 2012, according to the EIA report. Stockpiles at Cushing, Oklahoma, the largest U.S. oil-storage hub and the delivery point for WTI futures, expanded by 145,000 barrels to 40.9 million.
Distillate supplies, including heating oil and diesel, declined 1.02 million barrels, said the EIA, the Energy Department’s statistical arm. Supplies were projected to have climbed by 1.25 million, according to the median estimate of 11 analysts surveyed by Bloomberg.
WTI has technical support along the so-called neckline of a head-and-shoulders formation, at about $91.90 a barrel today, according to data compiled by Bloomberg. Futures are rebounding from this level this week. Buy orders tend to be clustered around chart-support levels.
“It’s a big surprise on the inventory number,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney who predicts investors may sell WTI contracts at about $97.10 a barrel. “It was a big draw. We have a clear short-term uptrend in place now.”