Crude drops as Libyan rebels hand over control of export ports
BY MOMING ZHOU
TRIPOLI, Libya (Bloomberg) -- Brent and West Texas Intermediate crudes fell for the first time in three days after Libyan rebels surrendered control of two oil ports to the government, enabling the OPEC country to increase exports.
Brent dropped as much as 1.4%. The self-declared Executive Office for Barqa handed over the oil terminals of Hariga and Zueitina overnight, and will relinquish the other two ports they control in two to four weeks, said Ali Al-Hasy, a spokesman for the group. Libya’s output fell to 250,000 bpd in March from 1.4 million bpd a year earlier, according to data compiled by Bloomberg.
“The possibility that Libyan barrels are returning to the market is weighing on oil,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Conn. “Rising supplies will drive the market lower.”
Brent for May settlement slid $1.12, or 1%, to $105.60/bbl at 12:13 p.m. New York time on the London-based ICE Futures Europe exchange. The volume of all futures traded was 31% higher than the 100-day average.
WTI for May delivery decreased 77 cents, or 0.8%, to $100.37/bbl on the New York Mercantile Exchange. Volume was 11% above the 100-day average. The U.S. benchmark grade’s discount to Brent shrank to $5.23 from $5.58 on April 4.
Hariga has a capacity of 110,000 bpd, and Zueitina can handle 70,000 bpd, according to IHS Inc. The other two terminals are Es Sider, the nation’s largest port at 340,000 bpd, and the Ras Lanuf terminal with 220,000 bpd.
The port opening “is definitely a bearish development,” said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy. “But we have to see if that comes to fruition.”
Libya currently exports about 85,000 bpd of crude from the offshore fields of Jurf and Bouri, which are unaffected by the protests that have disrupted output on land, according to the Oil Ministry.
“The protesters are banned from returning or obstructing work at the ports,” Justice Minister Salah Al-Mirghani said after talks with rebels April 6 in Zueitina.
Libya, the holder of Africa’s biggest crude reserves, has become the smallest producer in the 12-member OPEC, as rebels seeking self-rule in the eastern region of Cyrenaica halted production and shipments.
“If Libya production does increase, it should provide some pressure on Brent relative to WTI,” said Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC.
WTI rose earlier with gasoline futures, which reached a one-week high before both declined again. Gasoline for May delivery slipped 1.66 cents, or 0.6%, to $2.9147/gal. It climbed as much as 0.5% to $2.9461, the most since March 28.
The rebound in WTI was “really led by gasoline,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
With assistance from Grant Smith, in London, and Maher Chmaytelli, in Dubai.