The light, sweet crude oil contract for May delivery rebounded modestly on the New York market Mar. 28 to settle at nearly $48.40/bbl after approaching a 4-month low earlier in the week. Analyst said news of an oil disruption in Libya supported oil prices.
Libyan government officials said Mar. 28 that a militia had shut key oil pipelines, effectively shutting in 250,000 b/d. Libya had been ramping up production as it was exempt from production-cut targets set for this year’s first half by the Organization of Petroleum Exporting Countries and some other major producers.
Tariq Zahir, managing member of Tyche Capital Partners, told the Wall Street Journal, “If it wasn’t for Libya, we wouldn’t be up at these prices now.”
Libya’s crude production dropped to about 500,000 b/d, the lowest since September 2016, Bloomberg reported, saying exports from the Zawiya oil export terminal were disrupted. Libya’s production had been about 700,000 b/d last week.
Production was halted at Sharara in southwest Libya following the shutdown of the pipeline that links the field to Zawiya, Bloomberg said.
Separately, UAE officials announced plans to reduce production by 200,000 b/d from March to May, “which is actually more than was agreed,” said Commerzbank analysts.
Market participants awaited the Mar. 29 release of the US Energy Information Administration’s weekly oil and products inventory report. Rising US oil production has contributed to US benchmark prices trading lower in March than the $50-54/bbl range set experienced during January and February.
The American Petroleum Institute said late Mar. 28 that its preliminary estimate shows US oil supplies rose 1.9 million bbl for the week ended Mar. 24.
A survey by the WSJ showed analysts expected EIA will report oil supplies climbed by 1 million bbl for the week ended Mar. 24.
Energy prices
The crude oil contract for May delivery on the New York Mercantile Exchange increased 64¢ on Mar. 28 to close at $48.37/bbl while the June contract gained 60¢ to $48.90/bbl.
The natural gas price for April climbed 4¢ to a rounded $3.10/MMbtu. The Henry Hub cash gas price closed Mar. 28 at $2.93/MMbtu, down 2¢.
Heating oil for April was up 1¢ to a rounded $1.51/gal. Reformulated gasoline stock for oxygenate blending for April climbed 1.6¢ to a rounded $1.63/gal.
The Brent crude contract for May on London’s ICE increased 58¢ to $51.33/bbl. The June contract gained 52¢ to $51.42/bbl. The gas oil contract settled at $459.75/tonne on Mar. 28, up $8.50.
The average price for OPEC’s basket of benchmark crudes on Mar. 28 was $48.84/bbl, up 59¢.
Contact Paula Dittrick at [email protected].
