Brent, WTI prices reverse decline as Libya tensions persist
LONDON (Bloomberg) -- Brent crude reversed losses to trade little changed in London amid continued turmoil in Libya and Iraq. West Texas Intermediate was steady in New York after a technical issue disrupted electronic trading.
Futures dropped as much as 0.6% in London. Islamist militias seized Tripoli’s international airport in Libya, as political factions struggled to form a new government in war-torn Iraq. CME Group Inc., the world’s largest futures market, halted most of its Globex platform for about four hours, suspending contracts including oil and commodities.
“In Libya over the weekend, the airport was taken and that is obviously a warning sign to the market,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “The risk for Libya to fall back into supply cuts is still a danger.”
Brent for October settlement declined as much as 64 cents to $101.65 a barrel on the London-based ICE Futures Europe exchange and rose to $102.52 at 11:04 a.m. London time. The volume of all contracts traded was about 66% below the 100-day average. Prices are down 7.8% this year and the contract decreased 34 cents to $102.29 on Aug. 22.
WTI for October delivery was 11 cents higher at $93.76 a barrel in electronic trading on the New York Mercantile Exchange. It was at a discount of $8.78 to Brent, compared with a close of $8.64 on Aug. 22.
The Chicago Mercantile Exchange, where investors trade the most WTI crude and Henry Hub natural gas benchmark contracts, resumed before the start of the regular session in New York. About 500,000 crude contracts and 300,000 gas futures change hands on the bourse every day. North Sea Brent, the bellwether grade for more than half the world’s oil, is mainly transacted on ICE Futures Europe.
In Iraq, U.S. President Barack Obama’s bid to have Arabs take the lead in combating Islamic State suffered a setback as Sunni lawmakers quit talks on forming a new government, after Shiite gunmen killed scores of worshipers at a mosque.
Conflict in Iraq, the second-biggest OPEC producer, has largely spared the south, home to about three-quarters of its crude output. The nation pumped 3 MMbpd last month, data compiled by Bloomberg show.
In Libya, production climbed to 656,000 bpd from 612,000 bbl on Aug. 21, Mohamed Elharari, a spokesman at state-run National Oil Corp., said Aug. 24. An alliance known as Fajr Libya, or Libya Dawn, said it wrested control of the Tripoli airport from another group amid weeks of fighting that threatened to worsen security in the nation, a member of the Organization of Petroleum Exporting Countries.
“The region is in chaos but production continues to rise,” Robin Mills, the head of consulting at Manaar Energy Consulting and Project Management, said by phone from Dubai. “Brent’s been pretty weak. Global demand is still sluggish.”