The OPEC member's oil sector has made a comeback following protests at oilfields and ports.
Libya's oil production unchanged at 900,000 bpd -NOC
The OPEC member's oil sector has made a comeback following protests at oilfields and ports.
LONDON, Sept 30 (Reuters) - OPEC's oil supply jumped to its highest in almost two years in September, a Reuters survey found, due to further recovery in Libya and higher output from Saudi Arabia and other Gulf producers in the face of sub-$100 per barrel oil prices.
Supply from the Organization of the Petroleum Exporting Countries averaged 30.96 million barrels per day (bpd) in September, up from 30.15 million bpd in August, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants.
"Libya has increased production massively and if you look forward, OPEC is producing more than the (forecast) demand for OPEC crude in 2015," said Carsten Fritsch, analyst at Commerzbank. "This puts pressure on OPEC ahead of their next meeting."
OPEC pumps a third of the world's oil and meets next in November. This month, the largest increase has come from Libya, where supply is up by 280,000 bpd despite conflict. Iraq, Nigeria, Angola and Saudi Arabia also boosted output.
This month's output is OPEC's highest since November 2012 when it pumped 31.06 million bpd, according to Reuters surveys. Involuntary outages, such as in Libya, kept output below OPEC's nominal 30 million bpd target in earlier months of the year. Iraq, like Libya, has also managed to increase supplies despite fighting in the country. Oil output rebounded due to higher exports from Iraq's southern terminals and increased output from fields in Kurdistan.
An advance by Islamic State fighters into northern Iraq has not reduced southern exports, but violence has hit supply of Kirkuk crude from the north and shut down the Baiji refinery, keeping crude output below Iraq's potential. Nigerian output, disrupted in earlier months of the year, has climbed in September, and another increase has come from Angola where CLOV, a new crude stream operated by Total , is ramping up exports.
Top exporter Saudi Arabia, supported by Kuwait and the United Arab Emirates, has boosted output informally to cover for outages elsewhere in the group. So far, there is no sign of any further trimming, according to the survey. In fact, industry sources in Saudi Arabia have talked of higher demand with the approach of winter and return of refineries from maintenance - factors that would argue against cutting output. Sources in the survey said supply to market had increased this month.
Some OPEC members have voiced concern over the drop in prices and its meeting on Nov. 27 in Vienna is likely see a debate on whether output needs to be cut.
OPEC's own forecasts suggest demand for its crude will fall to 29.20 million bpd in 2015 due to rising supply of U.S. shale oil and supplies from other producers outside the group - almost 1.8 million bpd below current output according to this survey.
Iran on Friday urged OPEC members to make joint efforts to keep the market from falling further, but the Gulf Arab producers remain unruffled according to comments from oil ministers and delegates.
Iranian output was steady in September, the survey found. Western sanctions over Iran's nuclear work are restraining its output, although supply has risen since the start of the year following a softening of the measures. Iran's budget needs oil prices well above $100, among the highest in OPEC, while the budget of non-member Russia assumes an average of $100.
(Editing by Keiron Henderson and Veronica Brown)
The price of crude oil has fallen to its lowest level in over two years in line with current economic conditions.
It will be nearly a month that Brent crude is trading below $100 per barrel.
Prices hovered around the $110 level for half a decade following the global financial crisis. In that period, the barrel of Brent oil traded below $100 only for a few days in two short periods of time in 2012 and 2013. The recent dip reflects an adjustment in the misbalances in the oil market rather than a reduction in geopolitical risks.
Compared to the start of the year, global oil supplies have increased considerably, and the glut of oil has driven crude oil prices down.
According to the US Energy Information Administration (EIA), global supply of crude oil and liquid fuel reached all-time highs of 92.6 million barrels per day in August.
Stable oil producers, such as Gulf Cooperation Council (GCC) members (and more specifically Kuwait and the UAE) have contributed to that output rise.
Kuwait increased crude output from 2.8 million barrels per day at the start of the year to 2.9 million in September, while signaling that it may rise to 3.0 million barrels per day next month.
The UAE’s oil production also rose this year from 2.7 to 2.9 million barrels per day.
In contrast, market leader Saudi Arabia cut its production this month by close to 5 percent, the largest reduction in two years, trying to support prices.
But a key differential factor in this period in that volatile producers in Africa and the Middle East experienced a spike in production.
Nigeria and Angola accounted for nearly 60 percent of the increase in oil output last month, and despite a surge in violence in Iraq and Libya, oil production rose in those two highly unstable countries too. Saudi Arabia’s cut was not large enough to increase prices, and further reductions are unlikely given the high level of spending of the country. Stockpiles also increased in the US.
Given the volatile and uncertain nature of Africa and the Middle East, a gradual sustained increase in supply is unlikely in those regions.
For instance, Libya’s largest oil field was temporarily shut down in September due to rising violence in the region. However, if high global production was to continue, an agreement among petroleum exporting countries (OPEC) to cut output will become a real possibility.
The last time OPEC unilaterally cut supplies was in 2008. A stronger economy would also push up oil prices higher. Global demand remains weak, however.
The largest economies after the US — the euro zone, China and Japan — decelerated this year.
The US is not importing as much oil as it used to, mainly due to a surge in domestic production.
Global growth is not expected to rebound this year, and this is a major factor behind oil prices remaining subdued.
Three major energy agencies cut their forecasts for global oil demand in the past month. The strength of the US dollar also exacerbates the oil demand slowdown as it makes oil products more expensive for other importers.
OPEC has already indicated that it may cut output as supply is outpacing demand for oil. However, even an OPEC production cut may still not be enough to drive prices back to levels witnessed in the last few years.
The primary upside risk to oil prices is a deterioration of the crisis in the Middle East. Otherwise, it is very likely that oil prices will hover at or below the $100 mark due to a combination of sluggish global demand and a lack of coordination by OPEC members.
— Prepared by Camille Accad, Economist at Asiya Investments, an investment firm investing in Emerging Asia.
Indonesian explorer MedcoEnergi has discovered additional oil and gas at Area 47 in Libya
MedcoEnergi said that the well location that lie outside reservoir closing contour proved the existence of stratigraphic element that may have connection to multiple structures in the area.
The discovery of O2 well and P2 well in July 2014 again proved the prolific hydrocarbon area of Ghadames Basin in Area 47, where large oil and gas reserves was discovered with a 90 per cent exploration success rate, it added.
Earlier this month, Libya declared the commerciality of B, C and J structures in Area 47. MedcoEnergi, with partners National Oil Corporation (NOC) Libya and Libyan Investment Authority (LIA), will commence this development together with the A, D and F structures, previously declared commercial in 2011.
Combined, the total estimated oil and gas recoverable reserves is 250mn barrels of oil equivalent. Lukman Mahfoedz, CEO at MedcoEnergi, said, “These successes prove our company’s strong capability in exploration with more and more discoveries of new oil and gas resources in Indonesia as well as overseas. This achievement will contribute to MedcoEnergi’s growth by adding oil and gas reserves and increasing the company’s reserve life index.”
Production from Libya’s Area 47 is expected to start in 2016, with a production capacity target of 50,000 bpd. The project will monetise about 300mn barrels of oil equivalent of recoverable reserves from six out of 16 oil and gas fields that have been discovered so far in Area 47.
North Sea Brent crude oil prices have remained under the symbolic $100/barrel level since September 5, falling to $94.13/barrel Thursday afternoon, the lowest level in more than two years.
The return of significant Libyan crude oil production - which has surpassed market expectations in both volume and longevity - has been an important contributor to downward pressure on Brent prices. Despite the deterioration of the security situation in Libya, with the internationally recognized government having fled the capital, crude oil production increased from 200,000 barrels per day (bbl/d) in June to almost 900,000 bbl/d by mid-September. Last week, violence shut production at Libya's largest oil field, reducing total Libyan production to around 600,000 bbl/d, though initial reports indicate the damage was not extensive and the Libyan National Oil Corporation reported production had resumed Tuesday, returning to almost 800,000 bbl/d.
The sustained increase in Libyan production over the summer weighed on an already well-supplied light sweet crude market in the Atlantic Basin, despite the fact that Libya's recent production has not come close to the level of 1.65 million bbl/d in 2010 and 2011, prior to the Arab Spring. Over the past several years, increasing U.S. light sweet crude production has significantly reduced light sweet crude imports to the United States. Those reduced imports, which were sourced primarily from Africa, became available to replace Libyan production lost to civil war and subsequent unrest. While Libyan production was disrupted, supply and demand in the Atlantic Basin was relatively balanced. However, as Libyan production has returned, and remained online, the price of Brent has fallen While the return of significant Libyan production has been an important factor putting downward pressure on the Brent price, weakening demand, particularly in Europe and Asia, is also important.
Economic growth in 2014 outside of the United States has been slow, and some recent data releases appear to confirm lower-than-expected growth, particularly in Asia and Europe. China, the largest contributor to forecast increases in global petroleum demand this year, reported that industrial production has risen at the slowest pace since 2008. Further, Chinese oil demand earlier this year appears to have been supported by the purchase of strategic crude oil stocks rather than by oil use related to economic growth. In Europe, the OECD has reduced expectations for economic growth through 2015 after data showed second quarter 2014 GDP contracted in Germany and Italy and stagnated in France. In addition to the weaker economy, which has been the primary factor weighing on crude demand, European refineries are facing increased competition from U.S. and Russian refineries, causing them to reduce utilization rates and demand for Brent crude.
Near-term seasonal market conditions are also affecting crude demand, as substantial refinery turnarounds in the United States, Europe, and Asia take place in September and October, reducing demand for crude. The International Energy Agency expects global refinery crude inputs to decline by 1.4 million bbl/d in September and an additional 1 million bbl/d in October before recovering in November and December.
The combination of added Libyan production, weakening global economic conditions, and seasonally low demand, each significant in its own right, has caused Brent prices to decline below the narrow band in which it has traded and has helped push near-term prices below longer-term prices (contango), which typically signifies weak near-term market fundamentals, encouraging inventory builds.
There are many factors that could alter the current oil market landscape. Seasonal refinery maintenance should be completed before the end of the year and, as a result, demand for crude should increase. On the supply side, there remain significant geopolitical risks, including heightened tensions, and in some cases open warfare, in key producing regions. In addition, Saudi Arabia, which recently cut production by 400,000 bbl/d, could make further production cuts. Earlier in 2014, near-record Saudi production had helped offset high levels of OPEC supply disruptions, but the return of significant Libyan production partially alleviates the need for those barrels. Additionally, the end of Saudi peak seasonal demand for summer power generation frees up crude that was previously being used domestically, lowering the impact of reduced production on Saudi crude exports.
U.S. average gasoline and diesel fuel prices decrease
The U.S. average price for regular gasoline as of September 22, 2014, was $3.35 per gallon, down six cents from the previous week, and 14 cents lower than the same time last year. Prices in all regions of the country declined, with the largest drop in the Midwest, where prices fell eight cents to $3.28 per gallon. The West Coast price dropped six cents to $3.68 per gallon, while the Rocky Mountains and Gulf Coast prices each fell five cents, to $3.54 per gallon and $3.13 per gallon, respectively. The East Coast price decreased three cents, to $3.34 per gallon.
The U.S. average diesel fuel price declined two cents this week to $3.78 per gallon, 17 cents lower than the same time last year, and the lowest in over two years, since July 16, 2012. The Midwest and West Coast prices both declined three cents, to $3.71 per gallon and $3.99 per gallon, respectively. The Rocky Mountain and East Coast prices fell two cents, to $3.84 per gallon and $3.80 per gallon, respectively. The Gulf Coast price decreased by a penny to $3.70 per gallon.
Propane inventories rise
U.S. propane stocks increased by 1.7 million barrels last week to 79.1 million barrels as of September 19, 2014, 13.7 million barrels (20.9%) higher than a year ago. Gulf Coast inventories increased by 0.9 million barrels and Midwest inventories increased by 0.6 million barrels. Rocky Mountain/West Coast inventories and East Coast inventories both increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 3.9% of total propane inventories.
OPEC members were urged on Friday by Iran to make efforts jointly to keep the price of oil from dropping any further highlighting a split in its members like Saudi Arabia who face lower pressures on budgets despite prices sliding toward just $95 per barrel.
The oil minister in Iran Bijan Zanganeh said that considering the trend in prices is on a downward track, members of OPEC should attempt to temper the production to avoid any further instability of price.
Iran has amongst the highest needs for oil prices to remain as high as possible of the other 11 members of the Organization of the Petroleum Exporting Countries.
Iran is often supporting measures that will likely boost prices. However, Saudi Arabia as well as other OPEC members in the Gulf has thresholds that are lower.
However, the Gulf producers in OPEC, thus far remain unaffected. The oil minister from Saudi Arabia this week in New York appeared to play down the price drop, while other delegates have stopped short of price supporting action.
One delegate said he was still relaxed referring to the oil market’s outlook and current situation.
Besides a demand that has been lower than expected a key element behind the fall in price has been Libya’s recovery. Its output is now close to 925,000 barrels a day from just 200,000 this past June.
Other members of OPEC, for the most part Saudi Arabia, had pumped more informally to make up for the lower output in Libya and other shortages. OPEC sources said they might pare back extra supplies if needed to help support a price increase.
Saudi Arabia lowered its output by close to 400,000 barrels a day this past August. However, the crude supplies in the market were actually bigger.
TOBRUCK Libya (Reuters) - Libya's eastern Hariga oil port has fully recovered from eight months of blockades by protesters and is exporting more than 120,000 barrels a day, port officials said.
"We are back to normal. The port is operating normally," Hariga terminal manager Rajab Abdulrasoul told Reuters. "We just exported one million (barrels) to China."
The progress at Hariga is part of Libya's oil sector recovery with national production now back to 900,000 bpd, despite the political turmoil that is increasing fears it is edging toward civil war.
Hariga port was slow to restart as the connecting Sarir and Messla fields needed to increase production and a group of security guards started a brief new protest to make financial demands, part of political chaos three years after the ousting of Muammar Gaddafi.
Abdulrasoul said the southern Sarir field was pumping around 80,000 bpd. Sarir was running below its capacity of more than 200,000 bpd because the connected eastern Ras Lanuf refinery had not restarted work yet since the end of the rebel blockage, he said.
Some 20,000 bpd was used to feed the Tobruk refinery which supplies the local market and also exports some products mainly to southern Europe.
"The rest is being exported," Abdulrasoul said.
In August, 3.845 million barrels of crude, or around 124,000 bpd a day on average, was lifted from Hariga. In September, 2.72 million barrels, or some 129,000 bpd, left the port until the 21th, the latest pot data showed. Tankers came from Italy, Croatia, Britain, Singapore, Liberia and Malta, according to details provided by the port administration.
The oil industry remains vulnerable to protests as the government is unable to control former rebels who helped oust Gaddafi.
An armed group seized the capital Tripoli in August, forcing the elected parliament to move to Tobruk, a remote city which has mostly escaped the country's chaos.
Tobruk's refinery, also located at the oil port, exported 77,546 barrels of diesel and 123,026 barrels of untreated naphtha until September 21th, the data showed.
FRANKFURT, Sept 25 (Reuters) - German oil and gas producer Wintershall, a unit of chemicals firm BASF, said on Thursday it had resumed oil production in Libya, after a 13-month hiatus.
"We are in the process of slowly starting up our onshore production in the Libyan desert and to stabilize it at an average of 35,000 barrels per day by beginning of October," he said.
Wintershall stopped production 13 months ago when output was 90,000 bpd, compared with a pre-war volume of 100,000 bpd, he added.
Wintershall was the second-largest foreign oil firm in the country before leader Muammar Gaddafi was removed from power in 2011.
(Reporting by Vera Eckert, editing by Susan Thomas)
Libya's oil output 925,000 bpd -NOC
A day earlier an NOC official had estimated output from Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), at 900,000 bpd.
Oil prices slid Wednesday as traders awaited the US crude inventories report and digested weak global economic data and the return of Libyan production to an already well-stocked market.
"Investors remain cautious as high crude oil inventories seem to offset any geopolitical risk in Middle East following the persistent tensions in Syria."
She added that US house price numbers and manufacturing survey data had both missed expectations on Tuesday, stoking worries over energy demand. The oil market was mixed Tuesday as traders also mulled poor eurozone business activity against better-than-expected Chinese manufacturing figures. Sentiment was meanwhile hit Wednesday by news that Germany's Ifo business confidence indicator fell in September.
Traders will later switch focus to the US government's snapshot of American energy inventories for the week ending September 19, for clues about demand in the world's top crude consumer.
Crude reserves are expected to have risen by 500,000 barrels on average in the week to September 19, according to analysts polled by the Wall Street Journal.
Gasoline stockpiles are expected to fall by 200,000 barrels, while stocks of distillates, which include heating oil and diesel, are expected to rise by 300,000.
Prices won partial support this week from news that US-led forces had started targeting jihadist militants in crude producer Syria.
"The support (for oil prices) was offered by the US and its Middle Eastern allies launching a series of airstrikes against Islamic State targets in Syria," said Capital Spreads dealer Jonathan Sudaria. "It fuelled speculation that oil supplies from the regions could be disrupted." - 'Ample supplies, downward pressure' -
However, Singapore's United Overseas Bank cautioned that the restarting of production in Libya's biggest oilfield "added to oversupply woes in a flush market".
Production at Sharara, Libya's largest oilfield, restarted Monday after its closure last week, the Wall Street Journal reported.
The 340,000 barrels-per-day capacity Sharara field was shut last week due to intense fighting near the vicinity of the export terminal and refinery linked to it. The country remains in turmoil due to fighting between militias.
A Libyan government spokesman on September 11 said the North African state expects production to reach 1.5 million barrels per day by year-end from more than 700,000 barrels currently.
"Ample supplies, combined with a perceived slowing of global economies, (are) continuing to provide downward pressure" on prices, said Inenco analyst Dorian Lucas.
"Supply has been further bolstered as Libya's output has rebounded back to 800,000 bpd following the restart of production at its Sharara oil field."
BENGHAZI Libya (Reuters) - Libya's national oil production has climbed to 900,000 barrels per day (bpd) with the major El Sharara oilfield at 200,000 bpd, an official with the National Oil Corporation said on Wednesday.
Libya's oil output is making a recovery, having risen to 800,000 barrels per day (bpd) after the restart of production at El Sharara this week. It reached 870,000 bpd before El Sharara was closed last week.
The OPEC member's crude production crashed to around 200,000 bpd at times over the last year compared with 1.4 million bpd before the summer of 2013 when a series of strikes, protests and blockades began from armed groups seeking demands.
Libya's government has struggled since the 2011 fall of Muammar Gaddafi to control brigades of former rebels who once fought a civil war to end his one-man rule but later began battling among themselves for a share of post-war power.
Oil production increases amid signs of political optimism in Libya
The successful formation of a new government, after an initial rejection, has raised optimism that institutional progress is possible and that dialogue to reach a political solution acceptable to all parties, or by all the tribes, is possible (if not probable in the short term). The most desirable outcome, under the present circumstances, is for the Libyan leadership to be able to find a peaceful solution that would allow a ceasefire and then the disarmament of militias and jihadist groups. In order for such a process to even begin, over the next few weeks, the official Parliament will have to absorb the old Parliament (heavily influenced by Qatar) in order to strengthen the institutions. It will not be easy and the chances of such a process succeeding will be tested next week.
The clash between Islamist militias and the “nationalists” (the more secular and ‘West’ friendly groups) in Libya has shifted in favor of the latter thanks to the intervention of ethnic guerrillas from the Tubu tribe in the oil rich region of Kufra in the south. The Tubu have fought alongside the “Operation Dignity” forces, led by General Khakifa Haftar, as part of the effort t
(Reuters) - Brent crude oil inched lower on Tuesday as ample global supplies outweighed tensions in the Middle East, while U.S. oil bounced higher after four sessions of losses.
Global oil prices have fallen steeply since June as geopolitical fears waned and strong supply, including from the United States, swamped markets.
Libyan oil output has risen to 800,000 barrels per day, with the key El Sharara oilfield restarting, a National Oil Corp (NOC) spokesman said on Tuesday, from 700,000 bpd at the weekend.
Iraq's southern oil exports have increased this month to 2.6 million bpd, approaching a record high hit in May.
Brent for November delivery fell 12 cents to settle at $96.85 a barrel after climbing as high as $97.59 a barrel in early trading. It hit a two-year low of $96.21 last week.
Brent is down nearly 6 percent this month, with the oil benchmark on track for a third straight monthly fall.
U.S. crude rose 69 cents to settle at $91.56 a barrel, rebounding from a session low of $90.58, which was its weakest since Sept. 11. Its discount to Brent narrowed to around $5.25 a barrel.
Eyes will now turn to a weekly U.S. oil inventory poll from the U.S. Energy Information Administration on Wednesday at 10:30 a.m. EDT (1430 GMT).
U.S. oil stockpiles were expected to have risen 400,000 barrels last week. Gasoline stocks were seen down 100,000 barrels and distillate stocks up 600,000 barrels.
The American Petroleum Institute on Tuesday said that crude stocks last week fell 6.5 million barrels, distillate stocks rose 3 million barrels and gasoline stocks rose 91,000 barrels.
"Even if we get a bearish inventory report, if hostilities in Syria grow overnight that may trump the stockpile number," said Dan Flynn, analyst at Price Futures Group in Chicago.
Brent had risen earlier in the session as the United States and its Gulf allies started air and missile strikes against Islamic State and other militants.
The U.S. military said the strikes, which were carried out with the support of Jordan, Bahrain, Saudi Arabia, Qatar and the United Arab Emirates, were designed to disrupt the threat of an "imminent attack" against U.S. and Western interests. Islamic State vowed revenge, singling out Saudi Arabia, the world's largest oil exporter, for supporting the U.S.-led strikes. The reported shutdown of a gasoline-making unit at Irving Oil's Saint John refinery in Canada, one of the largest refineries supplying New York Harbor, also prompted a jump in refined product prices. RBOB gasoline futures rose more than one percent to $2.619 a gallon.
(Reporting by Edward McAllister in New York, David Sheppard in London and Seng Li Peng in Singapore; Editing by Dale Hudson, Jane Baird, Andrew Hay, Chizu Nomiyama, Cynthia Osterman and Gunna Dickson)
Brent crude declined for the third time in four days after China’s finance minister damped speculation that the government will boost economic stimulus. West Texas Intermediate was steady in New York.
“Worries about China have increased,” Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna, said by e-mail. “China’s oil demand growth is on track to be healthy in the second half at 3.5 percent to 4 percent. If growth shrinks to 2 percent or so, that would bring additional pressure for oil prices.”
Brent for November settlement slid as much as 84 cents to $97.55 a barrel on the London-based ICE Futures Europe exchange and was at $97.78 at 1:03 p.m. local time. The volume of all futures traded was about 46 percent below the 100-day average for the time of day. Prices have decreased 12 percent this year.
WTI for October delivery, which expires today, rose 10 cents to $92.51 a barrel in electronic trading on the New York Mercantile Exchange. The more-active November contract was 5 cents higher at $91.70. The U.S. benchmark crude was at a discount of $6.03 to Brent for the same month, compared with $6.74 on Sept. 19.
Hedge funds cut bullish bets on Brent crude by the most in a month, according to exchange data. Net-long positions dropped by 5 percent in the week to Sept. 16, the biggest cut since Aug. 19, the data show.
An index of China’s factory output probably fell to 50 in September, a Bloomberg News survey showed before a preliminary reading from HSBC Holdings Plc tomorrow. That would be down from 50.2 for August. China will account for about 11 percent of world oil demand this year, compared with 21 percent for the U.S., the International Energy Agency forecasts.
“China is the key and growth has slowed there more than expected and will take a while to recover,” Christopher Bellew, senior broker at Jefferies International Ltd., said by e-mail. “Oil has further to fall because of weak demand. The trend is down, in spite of the onset of winter and continuing supply issues in Libya and Iraq.”
In Libya, the Zawiya refinery remains closed after a rocket attack last week, Abdallah said yesterday. The connected Sharara oil field halted as a precaution.
Libya is working to restore crude output after a year of unrest reduced it to the smallest producer in the Organization of Petroleum Exporting Countries.
To contact the reporters on this story: Ben Sharples in Melbourne at email@example.com; Grant Smith in London at firstname.lastname@example.org
(Reuters) - Brent crude fell below $98 a barrel on Monday, down for the third session in four, as sluggish demand and ample supplies outweighed a possible cut in oil output from the Organization of the Petroleum Exporting Countries (OPEC).
A cut in Libya's oil production also had limited impact on prices.
November Brent was trading 57 cents lower at $97.82 a barrel by 0645 GMT after posting its first weekly rise in three last week.
U.S. crude for October delivery fell 60 cents to $91.81 a barrel, ahead of the expiry of the contract at the end of Monday. "When you look at the increase in supplies in the past year, you see very strong growth in the United States in particular from non-conventional sources and also in other non-OPEC producing areas ... supply growth is not being driven by OPEC," said Phin Ziebell, economist at the National Australia Bank (NAB).
OPEC members, some of whom require oil prices at above $100 to meet budgetary needs, will review the organization's oil output policy at its next meeting on Nov. 27.
Oil production in Libya on the other hand had fallen to 700,000 barrels per day, down nearly 20 percent from 870,000 bpd a week ago as its El Sharara oilfeld and Zawiya refinery are still closed, said a spokesman for the state-run National Oil Corp (NOC) on Sunday.
But concerns over an extended stagnation in Europe that could pull the other economies down was highlighted at the G20 meeting in Australia on Sunday.
"We expect weak global demand for crude oil to have already been priced in based on the drop in prices we have seen in the past few months. We believe it is very unlikely that prices would increase," Phillip Futures said in a note dated Sept. 22.
Investors will look for cues on where demand from China, the world's second-largest economy, is heading from its flash manufacturing PMI reading due out on Tuesday. Earlier, the world's top energy consumer had reported that this month marked the slowest factory output growth in nearly six years, partly causing Brent to slump under $97, the lowest in more than two years.
"The overall story is of abundant supply and very slack demand being coupled with an increasing lack of nervousness about geopolitical tensions in the Middle East and the Ukraine," Ziebell of NAB said.
In signs that western sanctions could impact Russian oil and gas production in the long run, Exxon Mobil said on Friday it would wind down drilling in Russia's Arctic in the face of U.S. sanctions targeting Western cooperation with Moscow's oil sector.
French jets struck a suspected Islamic State target in Iraq for the first time on Friday, expanding a U.S.-led military campaign against militants who have seized a third of the country and also control large parts of neighbouring Syria.
Fighting has also intensified in southern Libya as soldiers and police clashed in the last few days near the country's biggest oilfield El Sharara. The field was shut last week because of damage to a storage facility at the Zawiya refinery in the north, which it feeds.
(Editing by Muralikumar Anantharaman and Anand Basu)
West Texas Intermediate crude fell for a third day on rising U.S. inventories as a stronger dollar weighed on commodity prices. Brent futures rose on supply risks.
“Oil continues to come under pressure from the idea that we have ample supplies,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The dollar is throwing pressure on oil.”
WTI for October delivery dropped 66 cents, or 0.7 percent, to end at $92.41 on the New York Mercantile Exchange. The volume of all futures traded was about 5.8 percent below the 100-day average. Prices gained 14 cents this week, snapping a two-week losing streak. The October contract expires on Sept. 22. Brent for November settlement gained 69 cents to $98.39 a barrel on the London-based ICE Futures Europe exchange, for a weekly gain of 1.3 percent. Volume was 32 percent below the 100-day average.
WTI for November was at a discount of $6.72 to Brent for the same month, compared with $5.72 yesterday. “You are seeing liquidation of the October futures before expiration,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.
Gasoline futures rose 2 percent to $2.6114 a gallon on the Nymex, the biggest daily increase since Sept. 3. Prices are up 3.7 percent this week. Ultra low sulfur diesel climbed 0.2 percent to $2.7166. The fuel fell 0.9 percent this week.
Conventional, 85-octane gasoline blendstock, or CBOB, in the Gulf reached a premium of 2 cents a gallon versus Nymex futures, the highest level since October 2012, data compiled by Bloomberg showed. Refiners including Exxon Mobil Corp. (XOM) and Marathon Petroleum Corp. (MPC) were said to be performing repairs at plants in the Gulf.
“The Gulf Coast gasoline market has been steadily rising to the point where people no longer want to ship gasoline all the way to New York Harbor,” said Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston, Texas. “As a result, the RBOB price in the harbor has to rise to attract imports.”
Crude supplies in the U.S. climbed 3.67 million barrels in the week ended Sept. 12 to 362.3 million, near the highest ever level for this time of year, the EIA, the Energy Department’s statistical arm, said Sept. 17. Average oil demand fell in the four weeks ended Sept. 12, the EIA said.
The U.S. Dollar Index advanced for a 10th straight week, the longest rally since at least March 1967. A strong dollar reduces commodities’ investment appeal.
Fed officials, who met Sept. 16-17, increased their median estimate for the federal funds rate to 1.375 percent at the end of next year, versus June’s forecast for 1.125 percent.
“The pressure here is from the dollar,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “The market is probably going to rebound next week because of OPEC production.” A reduction in crude output from the Organization of Petroleum Exporting Countries deepened as Libya’s biggest producing oilfield stopped pumping amid supply cuts from Saudi Arabia and potential disruptions to Nigerian exports.
Libya halted the Sharara oilfield as a precaution after a rocket attack on the connected Zawiya refinery three days ago, closing down about 30 percent of national output. In Africa’s largest oil producer, state-owned Nigerian National Petroleum Corp. was in talks yesterday to prevent a strike that threatened to disrupt exports. Saudi Arabia told OPEC that in August it made the deepest production cut in 18 months.
OPEC, supplier of about 40 percent of the world’s oil, may reduce its daily quota by 500,000 barrels to 29.5 million in 2015, Secretary-General Abdalla El-Badri said in Vienna on Sept. 16.
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LONDON, Sept 17 (Reuters) - Russia's main export crude Urals held firm in quiet trade in northwest Europe and the Mediterranean on Wednesday, underpinned by healthy refining margins, while lighter grades in the south were supported by renewed supply problems in Libya
Prices for Azeri were discussed about 10 cents higher to dated Brent than previously, traders said, at around $1.50 above dated Brent. Kazakhstan's CPC Blend was discussed near parity to dated for the first time since May.
Libya's El Sharara field has shut, an oil ministry official said on Wednesday, after a tank was damaged at the Zawiya refinery that it supplies during fighting between armed groups. The closure is expected to shut-in around 200,000 barrels a day of output.
It was the first time that fighting between armed groups hit Libya's oil industry since heavy clashes broke out in the capital Tripoli in July, and has stoked fears of further blows to the recovery in output seen in recent months. "We're wondering whether it's a one off or if there's going to be more to come," one trader said.
For Urals, traders were eyeing lower supplies at the start of this month and quarterly loading programmes showing exports of seaborne Russian Urals and ESPO blends are expected to decline by 6.2 percent next quarter.
Strong refining margins for Urals were also providing some support on Wednesday, with simple plants standing to make around $4.50 a barrel, according to Reuters models. That is up from around $3.20 a barrel last month.
OPEC may not need to cut its oil output target at a meeting in November, a Gulf OPEC delegate and other OPEC sources said on Wednesday, as strengthening demand in coming winter months should support oil prices that have fallen below $100 a barrel.
On Tuesday, OPEC Secretary General Abdullah al-Badri said he expected the group's production to be around 29.50 million barrels per day pd in 2015, not 30 million bpd, leading to speculation an output cut could be agreed at the next meeting in Vienna on Nov. 27.
(Reporting by David Sheppard; Editing by William Hardy)
West Texas Intermediate was little changed as rising U.S. crude stockpiles offset signs of diminished OPEC supply. Brent fluctuated in London.
“The nationwide build of 3.67 million barrels likely helped set the bearish tone for trading in the U.S.,” David Wech, an analyst at JBC Energy GmbH in Vienna, said in a report. The “expected tightening of U.S. monetary policy” is weighing on the outlook for global economic growth, he said.
WTI for October delivery rose 15 cents to $94.57 a barrel in electronic trading on the New York Mercantile Exchange as of 1:52 p.m. local time, after dropping earlier to $93.62. The volume of all futures traded was about 2 percent below the 100-day average. Prices have decreased 3.9 percent this year.
Brent for November settlement declined 7 cents to $98.90 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $5.51 to WTI for the same month.
West Texas Intermediate and Brent oils fell as a stronger dollar curbed the appeal of commodities to investors looking for a store of value. Diesel tumbled to the lowest level in more than two year on ample supply.
Supplies of gasoil, distillate’s European equivalent, gained in Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub, PJK International BV said today.
“Yesterday’s Fed statement and news conference have been examined closely and are having an impact on the dollar,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “This is propping up the dollar and putting downward pressure on commodities.”
WTI for October delivery slid $1.35 to settle at $93.07 a barrel on the New York Mercantile Exchange. It was the biggest decrease since Sept. 2. The volume of all futures traded was 3.3 percent above the 100-day average at 2:47 p.m. Prices have decreased 5.4 percent this year.
Brent for November settlement fell $1.27 to end the session at $97.70 a barrel on the London-based ICE Futures Europe exchange. Volumes were 11 percent lower than the 100-day average. The European benchmark crude grade closed at a $5.72 premium to WTI for the same month, down from $5.77 yesterday.
“We’re getting a divided reaction to the Fed,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.6 billion, said by phone. “The stock market is reacting positively to the remarks made at the Fed news conference while the currency and commodity markets are focused on the text. It’s impossible to know at this point what market has it right.”
Commodity markets dropped while U.S. equities climbed. Fed officials signaled they won’t be raising interest rates anytime soon, while suggesting they would tighten credit at a faster pace once the liftoff has begun. The Bloomberg Commodity Index of 22 futures dropped as much as 1.3 percent.
“Commodities are in headwinds over the dollar’s climb,” Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $120 billion of assets, said by phone. “The dollar has been on a tear. The Fed seems to be hinting that they will tighten.” Distillate Supplies Diesel futures fell as supplies climbed on both sides of the Atlantic. Gasoil stockpiles in independent storage in the European ports increased 7.2 percent to 2.79 million metric tons in the week to today, according to PJK. U.S. inventories of distillate fuel rose 279,000 barrels to 127.8 million in the week ended Sept. 12, the highest level since Sept. 27, 2013, an Energy Information Administration report showed yesterday.
Ultra low sulfur diesel for October delivery dropped 3.28 cents, or 1.2 percent, to close at $2.7123 a gallon in New York. It was the lowest settlement since July 6, 2012. Volumes were 61 percent above the 100-day average.
“Distillate production has been solid,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone. “It’s getting pummeled and it’s yet to find support.” Crude Supplies
U.S. crude supplies rose 3.67 million barrels to 362.3 million last week, the biggest gain in five months, according to the EIA, the Energy Department’s statistical arm. Gasoline inventories declined 1.64 million barrels to 210.7 million.
October gasoline futures slipped 0.82 cent, or 0.3 percent, to settle at $2.561 a gallon on the Nymex. Volumes were 24 percent above the 100-day average. Pump prices fell 0.9 cent to $3.364 a gallon nationwide yesterday, the least since Feb. 16, according to AAA, the largest U.S. motoring group.
A strike among oil workers in Nigeria entered its third day as a resolution hasn’t been reached, Sanusi Abdulakim, deputy president of Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said by phone. Nigeria is Africa’s biggest crude producer.
Libya’s Sharara field, the country’s biggest-producing asset, and the connected Zawiya refinery are still shut, Oil Movement Director Mansur Abdallah said by phone from Zawiya. Sharara was shut after a rocket attack on Sept. 15 on the nearby refinery. The field pumped about 250,000 barrels a day before the disruption, Abdallah said.
“The focus has been on interest rates and that’s pushed the dollar higher, which is hurting demand for commodities,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said by phone. “Oil would be much lower if not for the trouble in both Libya and Nigeria.”
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Libya's El Sharara oilfield is still operating but its production is fluctuating, a spokesman for state-run National Oil Corp (NOC) said