WTI heads for $100 as supply risks ease; Brent near 3-month low
BEN SHARPLES and GRANT SMITH
NEW YORK (Bloomberg) -- West Texas Intermediate crude headed toward $100 a barrel for the first time since May amid signs that Libyan output is continuing to increase. Brent crude traded near the lowest price in three months.
Futures declined as much as 0.6% in New York, after capping a 3.1% decrease last week. Production from Libya, the holder of Africa’s biggest crude reserves, climbed to 470,000 bpd, state-run National Oil Corp. said July 13. Exports from Iraq, OPEC’s second-largest producer, remain undiminished by an insurgency that flared last month.
“Oil supply in Iraq remains unaffected, Libya is returning, which means the supply risks are receding,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by email. “It seems that speculators are leaving the market and exacerbating the downtrend. But the supply risks are not gone for good, so the downside is rather limited from here.”
WTI for August delivery decreased as much as 57 cents, or 0.6%, to $100.26 a barrel at 8:56 a.m. London time in electronic trading on the New York Mercantile Exchange. The U.S. benchmark crude was at a discount of $5.96 to Brent, compared with $5.83 at the end of last week. Brent last traded below $100 on May 12. The volume of all futures traded was 72% higher than the 100-day average.
Brent for August settlement was at $106.43 a barrel on the London-based ICE Futures Europe exchange, down 23 cents. The contract dropped $2.01 to $106.66 on July 11, the lowest close since April 7. Prices are down 3.9% this year.
Brent fell 3.6% in the week to July 11, a third weekly decline, as the Sharara field resumed and two oil-export terminals reopened in Libya. The nation pumped 300,000 bpd in June, ranking it as the smallest producer in the Organization of Petroleum Exporting Countries, data compiled by Bloomberg show.
Rebels seeking self-rule in eastern Libya said they’re committed to an agreement to reopen Es Sider, the nation’s biggest oil port, distancing themselves from a protest that shut a smaller facility, Brega. Es Sider has the capacity to load 340,000 bopd, according to the Oil Ministry.
“We have rising supply out of the Middle East and that casts a negative feel over the market,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “This is also a period where we should be seeing tighter supply in the U.S., but we’re not really getting that.”
In Iraq, fighting remains concentrated in the north, where militants from a breakaway al-Qaeda group known as the Islamic State captured the city of Mosul last month. The conflict hasn’t spread to the south, the source of more than three-quarters of the country’s crude output.
Brent is halting its drop as a technical indicator shows futures have probably slid too quickly to sustain further losses, data compiled by Bloomberg show. The 14-day relative strength index is below 30 for a second day today, July 14, signaling the market may be oversold.