Oil prices rise ahead of producers’ compliance meeting

Pipelines are seen at the industrial zone at the oil port of Brega, Libya, in this January 12, 2017 photo. (Reuters)
Updated 21 January 2017

Oil prices rise ahead of producers’ compliance meeting

LONDON: Oil prices edged up for a second day on Friday on expectations that a weekend meeting of the world’s top oil producers would demonstrate compliance to a global output cut deal, but a larger than expected rise in weekly US crude stocks capped gains.
International benchmark Brent crude prices were up 58 cents at $54.74 a barrel at 1214 GMT.
US West Texas Intermediate (WTI) crude oil futures were trading up 52 cents at $51.89 a barrel.
“Prices were pushed down a bit too far and hopes will rise that the OPEC/non-OPEC meeting this weekend will show that these producers actually give some proof that they cut production,” said Hans van Cleef, senior energy economist at ABN Amro.
A weekend meeting in Vienna of members of the Organization of the Petroleum Exporting Countries (OPEC) and some producers outside of the group, including Russia, will establish a compliance mechanism to verify producers are sticking to a deal to reduce output, OPEC’s secretary-general told Reuters.
However, higher than expected crude oil and gasoline stocks in the US weighed on prices on Friday.
US crude inventories rose unexpectedly last week as refineries sharply slowed production, while gasoline stocks soared amid weak demand, the Energy Information Administration said on Thursday.
Crude inventories rose 2.3 million barrels in the week to Jan. 13, compared with analyst expectations for an increase of 342,000 barrels.
The data showed much larger than expected increases in gasoline stocks, with inventories on the US east coast, the biggest demand region, swelling to the highest weekly levels on record for this time of year, when refiners typically begin storing barrels ahead of the summer driving season.
Adding to bearish news was the continuing rise in oil production from Libya, which is exempt from the producers’ output cut deal. Libya’s National Oil Corporation (NOC) said production had now climbed to 722,000 barrels per day, resuming its rise after poor weather had caused a small dip.
Bjarne Schieldrop, chief commodities analyst at SEB Markets, said Brent crude was starting to move into a trading range centered around $55 a barrel as the production cut deal had placed a floor price of $50 a barrel, while US shale oil producers were capping the upside at $60 a barrel.
“As a new consensus is starting to form, the fog around the oil market balance is starting to clear and the oil price is likely going to start to stabilize,” he said.


Conflict-hit Libya to restart oil operations but with low output

Updated 10 July 2020

Conflict-hit Libya to restart oil operations but with low output

  • There is significant damage to the reservoirs and infrastructure
  • A first cargo of 650,000 barrels will be shipped by the Kriti Bastion Aframax tanker

TUNIS: Libya’s National Oil Corporation (NOC) lifted force majeure on all oil exports on Friday as a first tanker loaded at Es Sider after a half-year blockade by eastern forces, but said technical problems caused by the shutdown would keep output low.
“The increase in production will take a long time due to the significant damage to reservoirs and infrastructure caused by the illegal blockade imposed on January 17,” NOC said in a statement.
A first cargo of 650,000 barrels will be shipped by the Kriti Bastion Aframax tanker, chartered by Vitol, which two sources at Es Sider port said had docked and started loading on Friday morning.
The blockade, which was imposed by forces in eastern Libya loyal to Khalifa Haftar’s Libyan National Army (LNA), has cost the country $6.5 billion in lost export revenue, NOC said.
“Our infrastructure has suffered lasting damage, and our focus now must be on maintenance and securing a budget for the work to be done,” NOC chairman Mustafa Sanalla said in the statement.
Control over Libya’s oil infrastructure, the richest prize for competing forces in the country, and access to revenues, has become an ever-more significant factor in the civil war.
The internationally recognized Government of National Accord, supported by Turkey, has recently pushed back the LNA, backed by the United Arab Emirates, Russia and Egypt, from the environs of Tripoli and pushed toward Sirte, near the main oil terminals.