Oil steady on Libya halt as Saudi assures smooth end to curbs

Bloomberg

Oil steadied as Libya’s crude exports from a key terminal were disrupted and Saudi Arabia pledged that global producers will ease their output curbs without shocking the market.
Futures in New York were little changed, after rising 3 percent the previous two sessions. Libya’s crude loadings from the Mellitah terminal will be “modified” after protests impeded output at the El-Feel field. Cuts by OPEC and its allies may be phased out in 2019 in a way that won’t disturb the market, Saudi oil minister Khalid Al-Falih said. Still, US supply remains a threat, with the nation’s rig count rising for a fifth week to the highest since April 2015.
Oil has risen more than 5 percent this year, following a second annual gain, as a drain in US stockpiles and growing demand reassure investors that production cuts led by the Organization of Petroleum Exporting Countries are working. While America continues to pump record volumes, accompanied by an increase in exports, Al-Falih said the global oil market is re-balancing and bloated inventories are shrinking.
The “news flurry supports a price recovery,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd. in Zurich.
West Texas Intermediate for April delivery climbed 2 cents to $63.57 a barrel on the New York Mercantile Exchange as of 10:42 a.m. in London. Prices rose 78 cents, or 1.2 percent, to settle at $63.55, the highest in more than two weeks. Total volume traded was about 19 percent below the 100-day average.
Brent for April settlement fell 3 cents to $67.28 a barrel on the London-based ICE Futures Europe exchange. The contract on Friday climbed 92 cents, or 1.4 percent, to settle at $67.31. The global benchmark crude traded at a $3.72 premium to WTI.
Crude loadings at Melittah, the export terminal for El-Feel, will be slowed after force majeure was declared on deliveries from the deposit on Feb. 23 following protests over pay and other benefits, the state-run National Oil Corp. said in a document obtained by Bloomberg. Libya is an OPEC member that was allowed to increase production, exempt from the group’s effort to reduce output to eliminate a global glut.
Production at El-Feel, operated by a joint venture of NOC and Italy’s Eni SpA, was last disrupted for one day in December due to a power outage. The field has production capacity of 90,000 barrels a day but it’s not clear what output was before the latest disruption. NOC officials didn’t respond to phone calls seeking comment.
“Investors are likely looking at Libya for a potential reason for a rally in oil prices, but this shouldn’t last too long,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by phone from Singapore. “Global oil fundamentals have been improving ever since OPEC and its allies agreed for production cuts, and the demand story is still supporting prices.”