Oil market shrugs off Libya crisis
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[January 21, 2020] By
Ahmad Ghaddar
LONDON (Reuters) - Oil prices fell more
than 1% on Tuesday on expectations that a well-supplied market would be
able to absorb disruptions that have cut Libya's crude production to a
trickle.
Brent crude <LCOc1> was down 92 cents at $64.28 a barrel by 1016 GMT,
having risen to its highest in more than a week on Monday. U.S. West
Texas Intermediate crude <CLc1> was down 59 cents at $57.95.
"Market participants appear to fret less about supply disruptions in the
Middle East, or at least the risk of disruptions, thanks to the
impressive growth we have seen in U.S. output over recent years," Bank
ING said.
Almost all of Libya's crude export capacity is now under force majeure -
a waiver on contractual obligations - after pipeline blockades in the
east and west of the country hindered oil production.
![](http://archives.lincolndailynews.com/2020/Jan/21/images/ads/current/pestcontrol_bch_termites.png)
(Graphic: Libya Crude Exports by port:
https://fingfx.thomsonreuters.com/
gfx/editorcharts/OIL-LIBYA/0H001QXXKBJF/index.html)
If Libyan exports are halted for any sustained period, storage tanks
will fill within days and production will slow to 72,000 barrels per day
(bpd), said a spokesman for state oil company NOC. Libya has been
producing about 1.2 million bpd recently.
Anti-government unrest in Iraq, another major oil producer, also
supported oil prices initially, but officials later said output from
southern oilfields has been unaffected by the unrest.
Any supply disruptions could be offset by increased output from the
Organization of the Petroleum Exporting Countries (OPEC), which could
limit the impact on global oil markets, the head of Japan's petroleum
industry body said.
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![](../images/012120pics/busine37.jpg)
An oil pump jack of Canadian group Vermilion Energy is pictured in
Parentis-en-Born, France, October 13, 2017. REUTERS/Regis Duvignau
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ING said that spare OPEC capacity, which stands in excess of 3 million
bpd, was reassuring the market.
The International Monetary Fund (IMF) on Monday trimmed back its 2020
global economic growth forecasts by a tenth of a percentage point to
3.3% because of sharper than expected slowdowns in India and other
emerging markets. But the IMF said that a U.S.-China trade deal was
another sign that trade and manufacturing activity could soon bottom
out.
Barclays on Tuesday forecast 2020 oil demand to rise by 1.4 million bpd,
50,000 bpd higher than its previous forecast and up from growth of
900,000 bpd in 2019.
The bank maintained its 2020 forecasts for Brent and West Texas
Intermediate (WTI) prices at $62 and $57 a barrel respectively.
(This story has been refiled to remove extraneous word from headline,
repeat to addition subscribers)
(Additional reporting by Jessica Jaganathan in Singapore; Editing by
David Goodman)
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