(Bloomberg) -- Oil gained as Libya’s crude exports from a key terminal were disrupted and Saudi Arabia pledged that global producers will ease their output curbs without shocking the market.
Futures in New York rose as much as 0.6 percent, after rising 3 percent the previous two sessions. Libya’s crude loadings from the Mellitah terminal will be “modified” after protests impeded output at the El-Feel field. Cuts by OPEC and its allies may be phased out in 2019 in a way that won’t disturb the market, Saudi oil minister Khalid Al-Falih said. Still, U.S. supply remains a threat, with the nation’s rig count rising for a fifth week to the highest since April 2015.
Oil has risen more than 5 percent this year, following a second annual gain, as a drain in U.S. stockpiles and growing demand are reassuring investors that production cuts led by the Organization of Petroleum Exporting Countries and its allies are working. While America continues to pump record volumes, accompanied by an increase in exports, Al-Falih said the global oil market is re-balancing and bloated inventories are shrinking.
“Investors are likely looking at Libya for a potential reason for a rally in oil prices, but this shouldn’t last too long,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by phone from Singapore. “Global oil fundamentals have been improving ever since OPEC and its allies agreed for production cuts, and the demand story is still supporting prices.”
West Texas Intermediate for April delivery added 25 cents to $63.80 a barrel on the New York Mercantile Exchange as of 1:09 p.m. in Singapore. Prices on Friday rose 78 cents, or 1.2 percent, to settle at $63.55, the highest in more than two weeks. Total volume traded was about the same as the 100-day average.
Brent for April settlement was up by 15 cents to $67.46 a barrel on the London-based ICE Futures Europe exchange. The contract on Friday climbed 92 cents, or 1.4 percent, to settle at $67.31. The global benchmark crude traded at a $3.67 premium to WTI.
Libyan Exports
Crude loadings at Melittah, the export terminal for El-Feel, will be slowed after force majeure was declared on deliveries from the deposit on Feb. 23 following protests over pay and other benefits, the state-run National Oil Corp. said in a document obtained by Bloomberg. Libya is an OPEC member which was allowed to increase production, exempt from the group’s effort to reduce output to eliminate a global glut.
The nations taking part in the supply curbs are currently studying what a crude re-balancing will entail, and will announce their next steps once that’s analyzed,, according to Saudi Arabia’s Al-Falih. While the group has agreed to prolong the cuts until the end of this year, “the framework beyond 2018 is yet to be determined, but for sure from the Saudi and from the OPEC standpoint, there is a determination to translate the success of 2017 and 2018,” he said in New Delhi on Saturday.
In the U.S., the number of rigs targeting oil increased by 1 to 799, the longest streak of gains in eight months, according to Baker Hughes data Friday.
Other oil-market news:
- Russia and Angola last month topped the list of crude suppliers to China, the world’s second-biggest oil consumer. The total oil imports increased almost 20 percent from a year earlier to 40.64 million metric tons.
- Hedge funds reduced their WTI net-long position -- the difference between bets on a price increase and wagers on a drop -- for a fourth week in the period ended Feb. 20, said U.S. Commodity Futures Trading Commission data. The Brent net-long position dropped to the least bullish in about four months, according to ICE Futures Europe.