Oil Settles Near $52 as Investors Eye Libyan Crude Output Returnby
Libya guards prevent two oil fields from resuming production
Market waits to assess OPEC, non-OPEC production cuts in 2017
Oil settled near $52 a barrel as investors eyed the potential return of crude supply from Libya and awaited signs of output cuts in January after the deal among OPEC and non-OPEC nations to reduce a global glut.
Futures rose 0.4 percent in New York after fluctuating between gains and losses during the session amid light volume. Libyan oil-facility guards backtracked from an agreement to allow supply to flow from the El Feel and Sharara fields, two of the country’s biggest. Investors are focused on production cuts by major exporters that are set to start early next year. Saudi Arabia is said to plan to cut smaller amounts of crude volumes sold to Asia than to other regions including North America, according to people familiar with the matter.
Oil has traded near $50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov. 30 to reduce production for the first time in eight years. Many non-OPEC producers agreed to join the deal as well, with Russia pledging to cut output by 300,000 barrels a day next year. Goldman Sachs Group Inc. last week increased its second-quarter crude-price forecasts and predicted stockpiles would return to normal by mid-2017 amid the curbs.
“In regards to the OPEC deal, we had always expected the Saudis and OPEC to be able to really stick the landing and get the deal done. Compliance will be quite high,” Michael Tran, a commodities strategist at RBC Capital Markets based in New York, said by telephone. “This does set a floor for the market. You’ve shaken out a lot of these shorts.”
WTI for January delivery, which expires Tuesday, rose 22 cents to settle at $52.12 a barrel on the New York Mercantile Exchange. Total volume traded Monday was about 28 percent below the 100-day average. The more-active February future climbed 11 cents to end the session at $53.06.
Brent for February settlement declined 29 cents, or 0.5 percent, to settle at $54.92 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $1.86 to WTI for the same month.
A group of Libyan guards prevented the flow of oil by pipeline, Khaled Hadloul, an engineer at Mellitah Oil & Gas, which operates El Feel, said by phone. The Repsol SA-operated Sharara field is also yet to restart because both fields feed into the same pipeline network, Hadloul said.
“If there is one thing driving the market, it would be the false start on the Libya oil fields. The Libya situation is a very complex one,” Bruno Stanziale, director of commodity strategy at Eurasia Group, said by telephone
- Saudi Arabia crude oil exports fell to 7.636 million barrels a day in October and oil production was 10.625 million barrels a day, according to JODI. Iran crude exports rose to 2.33 million barrels a day that month.
- U.S. crude inventories probably dropped by 2.5 million barrels last week, according to the median estimate in a Bloomberg survey before an Energy Information Administration report this week.
- Cushing, Oklahoma crude stockpiles rose 1.9 million barrels last week, according to a forecast compiled by Bloomberg.
- JPMorgan Chase & Co. increased its 2017, Brent and WTI crude forecasts on OPEC deal.
- BP Plc agreed to buy stakes in West African licenses held by Kosmos Energy Ltd. for $916 million as it builds its gas business following an acquisition in Egypt last month.
- Over the weekend, BP also agreed to swap about $2.2 billion of its shares for a stake in one of Abu Dhabi’s largest onshore oil concessions.