Oil pares gains as OPEC sees rapid growth in rival supply

Oil rose slightly higher on Wednesday after strong Chinese factory activity, though concern over the pace of growth in US output, as well as other producing nations, meant there were limited gains. (REUTERS)
Updated 14 March 2018
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Oil pares gains as OPEC sees rapid growth in rival supply

LONDON: Oil rose slightly higher on Wednesday after strong Chinese factory activity, though concern over the pace of growth in US output, as well as other producing nations, meant there were limited gains.
The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report it expects supply from non-members to grow more quickly than it had previously expected.
And US oil production is set to rise further this year, OPEC also said on Wednesday, but the crude market will continue to rebalance as cartel members and Russia trim their output in a bid to support prices.
The group also reported the first increase in oil inventories across the world’s most industrialized nations in eight months in January, a sign the impact of its coordinated output cuts may be slowly waning, and cut its forecast for demand for its own crude.
Brent crude oil futures were last up 2 cents at $64.66 a barrel by 1410 GMT, while US West Texas Intermediate (WTI) futures were up 11 cents at $60.82 a barrel.
“The OPEC report seems to illustrate that the speed of the market rebalancing is slowing,” Commerzbank strategist Carsten Fritsch said.
“(It suggests) the rebalancing can’t go much further from here and according to the OPEC report, demand for OPEC’S oil must be 33 million barrels per day for the rest of the year to get rid of any remaining oversupply.”
OPEC cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline.
Earlier in the day, oil prices got a boost from a broader investor push into commodities after Chinese data showed the world’s largest importer of raw materials saw industrial production grow more than expected over the first two months of the year.
ING commodities strategist Oliver Nugent said the Chinese industrial output was “reinforcing that bullish narrative” across the commodities market, including oil.
Rising US output, as well as seasonally low demand, mean US crude inventories rose by 1.2 million barrels in the week to March 9 to 428 million barrels, the American Petroleum Institute said on Tuesday.
Seasonal demand patterns for crude and refined products mean the market may only be weeks away from a run of declines.
“We are now only two to four weeks away from when weekly oil inventory data will start to draw again which should be supportive for oil prices,” SEB commodities strategist Bjarne Schieldrop said.
Weekly US crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.