Oil rescued from price lows by Libyan supply disruption
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[March 13, 2018]
By Amanda Cooper
LONDON (Reuters) - Oil rose on Tuesday,
after Libya said loadings of crude at a key port had been suspended,
offseting an earlier dent to the price caused by evidence of the
inexorable growth in U.S. oil output.
All loadings at the Libyan oil export port of Zawiya, which exports
crude from the 308,000-barrel per day El Sharara field, have stopped due
to a strike, a Libyan website said.
Brent crude futures <LCOc1> were last up 11 cents on the day at $65.06 a
barrel by 1017 GMT, up from an earlier low of $64.67, while U.S. West
Texas Intermediate (WTI) crude futures <CLc1> were up 17 cents at $61.53
a barrel.
Both crude benchmarks dropped by around 1 percent on Monday after the
U.S. Energy Information Administration said output from the shale basin
would hit a new record high in April.
"Libyan oil loadings have been suspended, that's why the market is
rallying at the moment," PVM Oil Associates analyst Tamas Varga said.
"Meanwhile, the EIA confirmed, or possibly made worse, what we already
knew about U.S. shale output, which is relentlessly marching higher."
U.S. crude production from major shale formations is expected to rise by
131,000 bpd in April from the previous month to a record 6.95 million
bpd, the U.S. Energy Information Administration (EIA) said in a monthly
report on Monday.
"Oil prices moved lower ... after (the) Energy Information
Administration published a report that crude production from seven major
U.S. shale plays is expected to see a climb," said Stephen Innes, head
of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
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A pump jack is seen at sunrise near Bakersfield, California October
14, 2014. REUTERS/Lucy Nicholson/File Photo
That expected increase would top the 105,000 bpd climb in March from the
previous month, to what was then expected to be a record high of 6.82
million bpd, the EIA said.
U.S. production is expected to rise above 11 million bpd by late 2018,
taking the top spot from Russia, according to the International Energy
Agency (IEA).
Healthy demand and ongoing supply restraint by a group or producers led
by the Organization of the Petroleum Exporting Countries (OPEC) and
Russia, however, have so far prevented further price falls.
"The average monthly increase (in shale output) in the eight months
since September is 155,000 bpd. This would see shale oil production soar
by 1.5 million bpd within a year – enough to cover the total increase in
global oil demand," Commerzbank said in a note.
"Thus OPEC has no scope to expand production from its current level."
But in a sign that an early-year rally in crude oil may have fizzled
out, money managers cut their combined net long positions in the six
most important futures and options contracts linked to petroleum prices
by 50 million barrels in the week to March 6.
(Additional reporting by Henning Gloystein in SINGAPORE; Editing by Jon
Boyle)
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