Wednesday, September 17, 2014

Brent Trades Near Week-High as Libyan Field Halts

Brent crude trade near its highest closing level in a week after Libya said it halted its Sharara oil field after a rocket attack on the connected Zawiya refinery. West Texas Intermediate was little changed.
Brent advanced as much as 0.6 percent in London, reversing an earlier loss. Libya halted the Sharara field, which had been producing 250,000 barrels a day, as a precaution following the attack two days ago, Mansur Abdallah, director of oil movement at the Zawiya plant, said by phone. Nigerian authorities are in talks to avoid the disruption of oil exports as a strike enters its second day.
“Libya might have been one of the reasons behind the slump before,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by e-mail. “So ongoing insecurity might well lead the price recovery.”
Brent for November settlement added as much as 56 cents to $99.61 a barrel on the ICE Futures Europe exchange and was at $99.24 as of 1:32 p.m. in London. It closed at $99.05 yesterday, the highest since Sept. 9. The European benchmark crude was at a premium of $5.56 to WTI on ICE for the same month. It closed at $5.24 yesterday.
WTI for October delivery was at $94.66 a barrel in electronic trading on the New York Mercantile Exchange, down 22 cents. The volume of all futures traded was about 15 percent more than the 100-day average for the time of day. Prices have decreased 3.8 percent this year.

Libya Losses

A rocket exploded near a crude storage tank at the Zawiya plant on Sept. 15, National Oil Corp. spokesman Mohamed Elharari said yesterday. Libya has been in the process of restoring output after more than a year of unrest that had reduced it to the smallest producer in OPEC.
Sustaining higher production in Libya in the longer term might be difficult “given the absence of strong governance mechanisms,” Miswin Mahesh, an analyst at Barclays Plc in London, said by e-mail.
The Organization of Petroleum Exporting Countries’ output target may fall next year, Secretary-General Abdalla El-Badri said yesterday in Vienna. OPEC’s daily output target may fall by 500,000 barrels to 29.5 million barrels in 2015, El-Badri said.

OPEC Target

“The first official signs that OPEC is starting to feel a little uneasy about the current market environment and the price of oil are emerging,” David Wech, an analyst at consultants JBC Energy GmbH in Vienna, said in a report.
Saudi Arabia cut its crude supply by 408,000 barrels a day in August, the biggest reduction since 2012, a submission made by the country to OPEC shows. Demand for OPEC’s oil will drop to 29.2 million barrels a day in 2015 from 29.5 million this year, the group said in a Sept. 10 report.
Crude output is at risk in Nigeria, Africa’s biggest producer, because of a strike over pensions, according to Babatunde Oke, a Lagos-based union spokesman. State-owned NNPC is optimistic that export terminals won’t be affected, according to Ohi Alegbe, a company spokesman.
In Iraq, the second-biggest producer in OPEC, U.S. personnel will help Iraqi forces with planning, logistics and coordination as part of the campaign against the Islamic State, Army General Martin Dempsey, the chairman of the Joint Chiefs of Staff, told a Senate committee yesterday. Iraqi forces are “doing fine” for now and don’t need help in the field, he said.

U.S. Stockpiles

U.S. crude supplies probably shrank by 1.5 million barrels last week to 357.1 million, according to a Bloomberg News survey before an Energy Information Administration report today. That would be a fifth weekly decline.
Gasoline inventories fell by 125,000 barrels to 212.2 million during the week ended Sept. 12, according to the median estimate of 10 analysts surveyed by Bloomberg. Distillate supplies, which includes heating oil and diesel, rose by 750,000 barrels to 128.2 million, the survey showed.
The industry-funded American Petroleum Institute was said to report U.S. crude stockpiles increased by 3.3 million barrels last week, while gasoline supplies fell by 1.2 million, according to Bain Energy. The API in Washington collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines, while the government requires that reports be filed with the EIA.
To contact the reporter on this story: Grant Smith in London at
To contact the editors responsible for this story: Alaric Nightingale at Rachel Graham

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