Monday, December 16, 2013

Oil gets lift from Libya ahead of Fed meeting

SAN FRANCISCO (MarketWatch) — Oil futures gained ground on Monday as traders focused on political unrest in North African oil producer Libya, ahead of a decision by Federal Reserve officials due later this week on the central bank’s stimulus program.
January crude oil /quotes/zigman/2196833/realtime CLF4 +0.98%  added 88 cents, or 0.9%, to $97.48 a barrel on the New York Mercantile Exchange. Prices Friday had lost 0.9% to tally a decline of 1.1% for that week.
On the ICE Futures exchange, Brent crude saw bigger gains, with the January contract /quotes/zigman/2648923/realtime UK:LCOF4 +1.56%  adding $1.71, or 1.6%, to $110.54 a barrel on its expiration day.
The European crude-oil benchmark’s strength is all based on Libya, said Tariq Zahir, managing member at Tyche Capital Advisors.
“Expectations were for three [oil] ports to re-open over the weekend,” but that didn’t happen and news reports say that they may not open for some time, he said.
A Libyan rebel leader on Sunday refused to reopen the oil ports in the country’s east, which dampened hopes that Libya would export more crude into the market soon.
Platts on Monday attributed a month-on-month decline in oil production from the Organization of the Petroleum Exporting Countries to the turmoil in Libya. OPEC output in November fell 230,000 barrels per day from the previous month to 29.7 million barrels per day — the lowest volume since mid-2011, according to a Platts survey of OPEC and oil industry officials and analysts released Monday.
“Anticipating future OPEC oil output will likely be difficult due to Libya’s uncertainty,” said John Kingston, Platts global director of news, in a statement.
Analysts at Commerzbank cautioned, however that “the impact of negative news from Libya should not be overestimated,” given that the country is reportedly producing just shy of 200,000 barrels of crude oil per day.
/quotes/zigman/2196833/realtime CLF4 97.55, +0.95, +0.98%          
“Before the war, Libya had been planning to step up production from 1.5 million barrels to 2 million barrels per day. If the situation were to normalize again in Libya, the oil price would no doubt come under increased pressure again,” they said in a note to clients.   
Over in the U.S., oil production will be close to a record of 9.6 million barrels a day by 2016. the Energy Information Administration said in a preview of its annual outlook.
And in China, HSBC data showed that growth in the nation’s manufacturing-sector activity slowed to a three-month low.

Fed watch

Meanwhile, the Fed could have a big impact later on this week, he said, adding that if the central bank decides to taper its bond-buying program that’ll provide weakness to West Texas Intermediate crude prices traded on Nymex.
The Federal Open Market Committee is due to convene Tuesday for the final policy meeting of the year, as markets focus on whether the central bank will start tapering its $85 billion monthly bond-purchase program. The Fed’s policy statement is due Wednesday afternoon.
Traders have been studying the latest economic figures for clues on what the Fed will decide to do with its stimulus program. The program has been seen as supportive for energy demand.
U.S. economic data released Monday showed that an index of manufacturing conditions in the New York area recovered slightly in December. Productivity in the third quarter was revised up to 3% from an initial read of 1.9% and industrial production in November saw the biggest one-month percentage gain in a year to reach a record high.
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Back on Nymex, prices for petroleum products edged higher along with gold, but natural-gas prices pulled back after a hefty gain last week.
January gasoline /quotes/zigman/3163477/realtime RBF4 +1.25% rose nearly 4 cents, or 1.4%, to $2.665 a gallon, while January heating oil /quotes/zigman/9821432/realtime HOF4 +1.10% advanced 3 cents, or 1.1%, to $3.01 a gallon.
January natural gas /quotes/zigman/2294299/realtime NGF14 -1.59% fell 8 cents, or 1.9%, to $4.27 per million British thermal units, pulling back after a 5.8% gain last week. Read: Energy firms stick with oil despite natural gas moves.

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