Oil falls as Libyan supply seen rising, Iraq output remains safe
NEW YORK (Bloomberg) -- West Texas Intermediate fell for a sixth day, the longest losing streak since May 2012, while Brent slid amid speculation that crude supplies will increase after Libyan rebels agreed to hand over two export terminals.
Futures dropped as much as 0.5% in New York. Libya is reopening the Es Sider and Ras Lanuf facilities after reaching an agreement yesterday, July 2, with a group that blockaded ports in the country’s east in the past year, said Ahmed al-Amin, a government spokesman. Fighting in Iraq, OPEC’s second-largest producer, still hasn’t spread to the south, home to more than three-quarters of its crude output.
“Libya will just add more supply, and the world is awash with oil,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s nothing new from Iraq and investors are starting to realize that there’s not going to be a major affect in terms of supply.”
WTI for August delivery declined as much as 53 cents to $103.95 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.11 at 2:38 p.m. Sydney time. The contract fell 86 cents to $104.48 yesterday, the lowest close since June 11. The volume of all futures traded was about 5% above the 100-day average. Prices have gained 5.8% this year.
Brent for August settlement dropped as much as 52 cents, or 0.5%, to $110.72 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.95 to WTI. The spread narrowed for a third day yesterday to close at $6.76.
Libya’s biggest and third-largest oil ports were handed over in a gesture of support for the newly elected parliament, according to a spokesman for the group that calls itself the Executive Office for Barqa. Es Sider and Ras Lanuf, which can handle a combined 560,000 bpd of crude, may boost Libya’s export capacity almost five-fold.
The rebels, who are seeking self-rule for a region known as Cyrenaica, occupied the facilities in July last year, demanding to share oil revenues to make up for neglect experienced under Muammar Qaddafi’s 42-year rule. Libya, a member of the Organization of Petroleum Exporting Countries, holds Africa’s biggest reserves.
In Iraq, oil production has mostly been unaffected by an Islamist insurgency in the north. The country will ship 2.8 MMbpd this month, close to a record high, loading programs obtained by Bloomberg show.
Crude inventories in the U.S., the world’s largest oil consumer, shrank by 3.2 MMbbl to 384.9 million in the week ended June 27, the Energy Information Administration reported yesterday. Supplies were projected to decrease by 2.4 million, according to the median estimate in a Bloomberg News survey of 10 analysts.
Gasoline stockpiles slid by 1.24 MMbbl, the first drop in five weeks, said the EIA, the Energy Department’s statistical arm. Distillate fuels, including heating oil and diesel, climbed by 975,000 bbl to 121.5 million, the highest level since Jan. 10.
WTI’s decline may stall as it approaches technical support, data compiled by Bloomberg show. Futures are trading along an upward-sloping trend line extending from the intraday lows of May 1 and June 5, at about $104 a barrel today. Buy orders tend to be clustered along chart-support levels.