MARKET WATCH: Oil prices slip on possible resumption of Libya supply

Crude oil futures prices slipped during Apr. 2 trading on both the New York and the London markets, which analysts attributed primarily to reports that the Libyan government and rebels had reached an agreement to reopen some oil terminals within days.

Market observers quickly noted that the reported agreement could yet fall apart, failing to actually result in a resumption of oil exports from terminals that have been closed for months.

Commerzbank analysts issued a research note Apr. 3 saying the “expectation of a growing oil supply from Libya” has put downward pressure on Brent this week, and the US light, sweet crude benchmark “has also been dragged down by the weak Brent price.”

Ole Hansen, Saxo Bank analyst, said, “Resumption of supplies from Libya, which has been cut to a trickle in recent months, is a very important development as the light sweet variety is much sought by refineries about to ramp up production of gasoline.”

World market analysts continued to closely monitor the Ukraine conflict, noting that Ukraine’s ousted President Viktor Yanukovych has said he erred upon inviting Russian troops into Crimea. Yanukovych told Associated Press that he wants to negotiate with Russian President Vladimir Putin for Crimea’s return to Ukraine.

“Crimea is a tragedy, a major tragedy,” Yanukovych told AP during his first interview since he fled to Russia in February. Since then, Western economic sanctions have been imposed on Russia.

Yanukovych said he has talked with Putin twice by telephone and met with him once, describing their conversations as “difficult.”

Meanwhile, the US Energy Information Administration reported a 74-bcf drop in estimated natural gas in underground storage in the Lower 48 for the week ended Mar. 28.

EIA’s latest weekly gas storage report showed 822 bcf total in storage, down 878 bcf from a year ago and 992 bcf below the 5-year average.

Energy prices

The New York Mercantile Exchange May crude oil contract was down 12¢ on Apr. 2, closing at $99.62/bbl. The June contract dropped 15¢ to $98.90/bbl.

The May natural gas contract declined rose 8.8¢ to a rounded $4.36/MMbtu. The Henry Hub cash price for gas was unavailable on Apr. 2.

Heating oil for May delivery dropped 2.1¢ to a rounded $2.87/gal. Reformulated gasoline stock for oxygenate blending for May delivery was down less than a penny to remain at a rounded $2.87/gal.

In London, the May ICE contract for Brent crude delivery declined 83¢/bbl, closing at $104.79/bbl. The June contract dropped 79¢ to $104.77/bbl. The ICE gas oil contract for April declined $19.50 to $873.50/tonne.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $101.72/bbl on Apr. 2, down $1.53.

Contact Paula Dittrick at paulad@ogjonline.com.

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