(Bloomberg) -- Oil climbed to the highest level this month as sanctions on Rosneft Trading and escalating tensions in Libya threatened global crude supply.
Futures rose as much 2.5% in New York on Wednesday. The U.S. sanctioned a unit of Russia’s Rosneft PJSC for maintaining ties with Venezuela’s Nicolas Maduro and the state-run oil company, putting Venezuela’s ability to export crude in jeopardy. Meanwhile, cease-fire talks were suspended in Libya after the capital’s port was shelled by forces loyal to military commander Khalifa Haftar, who has forced a blockade of the country’s exports.
“There’s no doubt the market is getting a lift from Libya and sanctions,” said Mike Hiley, head of OTC energy trading with LPS Partners. “The coronavirus is slowly moving to the back of people’s minds. The shape of the curve has improved and indicates there is some demand for product.”
China, the world’s biggest oil importer, is considering steps to shore up its economy, such as direct cash infusions and mergers to revive its airline industry, in the midst of the coronavirus outbreak.
The latest attack in Libya forced authorities to evacuate tankers carrying gasoline and liquefied petroleum gas before they had unloaded, according to an official from state-run National Oil Corp. The nation’s crude output has dropped to around 123,000 barrels a day from 1.2 million a day before a blockade of ports by Haftar’s supporters started in mid-January.
West Texas Intermediate for March delivery advanced $1.10 to $53.15 a barrel at 11:45 a.m. on the New York Mercantile exchange.
Brent for April settlement climbed $1.40 to $59.15 a barrel on the ICE (NYSE:ICE) Futures Europe exchange. The structure of the futures market is also showing signs of tightening.
Brent’s prompt spread rose as much as 13 cents to its strongest level this month, signaling concerns of oversupply may be easing.
