Oil holds near 1-week high as biggest Libyan oilfield disrupted
HONG KONG and LONDON (Bloomberg) -- Oil traded near the highest closing level in a week as OPEC member Libya halted its biggest oilfield and as drilling by U.S. companies slowed the most since January.
Futures were little changed in New York after rising 3.7% the previous two sessions. Libya declared force majeure, a legal clause that allows the suspension of deliveries, on supplies from the Sharara field after it was blocked on Sunday, National Oil Corp. Chairman Mustafa Sanalla said. Drillers targeting crude trimmed the rig count by five to 763, the second decline this month, according to data Friday from Baker Hughes.
Oil in New York has fluctuated below $50/bbl as investors weigh rising global output against supply cuts by OPEC and its allies that are taking longer than expected to drain a glut. While the U.S. rig count showed declines recently, American output has continued to expand, climbing to the highest level since July 2015.
“The fragility of Libya’s production increase” was highlighted by the problem at Sharara, said Giovanni Staunovo, an analyst at UBS Group in Zurich. “Considering that the political situation and security issues remain unresolved, production gains can be quickly reversed.”
WTI for September delivery, which expires Tuesday, was $0.02 higher at $48.53/bbl in New York. Total volume traded was about 13% above the 100-day average. Prices advanced $1.42, or 3%, to $48.51 on Friday, trimming the weekly loss to 0.6%.
Brent for October settlement lost $0.10 to $52.62/bbl on the Europe exchange. Prices rose 1.2% last week. The global benchmark crude traded at a premium of $3.92 to October WTI. It reached $4.06 on Friday, the widest since 2015.
The number of active rigs in fields is still near the highest since April 2015, according to Baker Hughes data. The expansion in American drilling is slowing as output from major shale plays is set to climb to a record next month.
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Libya’s Petroleum Facilities Guard said it’s working to reopen the pipeline linking the Sharara oilfield to the Zawiya export terminal, which was closed at the demand of a local armed group. Royal Dutch Shell, the world’s largest oil trader, is said to have loaded its first crude from Libya in five years over the weekend, according to two people familiar with the matter. The Shell cargo loaded on Saturday is for 600,000 bbl of crude from Libya’s Zueitina port.
Iraqi state oil marketing company, known as SOMO, is considering changing the current pricing formula for oil sales to Asian customers, according to traders who asked not to be identified. Total agreed to buy the oil and gas unit of A.P. Moller-Maersk, the French company’s biggest acquisition since 1999 and another sign of the accelerating pace of energy deals after a long downturn.
