Brent oil prices to see greatest weekly dip in 6 months

As Libya prepares to restart crude exports from two terminals, Brent heads for its biggest weekly decline in 6 months. Notably, Iraq’s crude production has remained unaffected by violence in the region and will ship 2.8 million barrels per day this month loading programs seen by Bloomberg show.

Meanwhile, West Texas Intermediate (WTI) also known as Texas light sweet, a grade of crude oil used as a benchmark in oil pricing is pegged for a second weekly drop.

Libya will start shipping crude from Es Sider and Ras Lanuf at full capacity after taking back control of the ports from rebels, according to National Oil Corp. Fighting in Iraq has been concentrated in the north, where insurgents from a splinter al-Qaeda group, known as the Islamic State of Iraq and Syria (ISIS), captured the city of Mosul in June. This fighting has not spread to the south, home to more than three-quarters of Iraq’s crude output.

This drop in oil prices is mainly due to Libya resuming operations from the two terminals that have been closed, say experts. For the moment this is described as a major relief, though what would actually happen is any ones guess.

Brent for August settlement was 23 cents higher at $111.23 a barrel on the London-based ICE Futures Europe exchange at 9:13 a.m. local time. The grade has lost 1.8 percent this week, its worst performance since Jan. 3. The European benchmark crude traded at a premium of $7.05 to WTI on ICE, compared with $7.56 on June 27.

WTI for August delivery was at $104.09 a barrel in electronic trading on the New York Mercantile Exchange, up 3 cents. The contract slid 42 cents to $104.06 yesterday in a sixth daily decline, the longest losing streak since May 2012. The volume of all futures traded was about 61 percent below the 100-day average for the time of day. Prices have declined 1.6 percent this week. Floor trading on the Nymex is closed today for the Fourth of July holiday.

Libya will resume shipments “as soon as possible” at the two ports, and talks on crude sales will start with international companies, Mohamed Elharari, a spokesman for state-run National Oil Corp., said yesterday. The country has become the smallest producer in the Organization of Petroleum Exporting Countries in the past year because of unrest.

“The dying-down of geopolitical tensions is clearly depressing oil prices,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “The market is removing some of the risk premium. West Texas has now fallen below the key support level of $105.25 a barrel, meaning that risks are now on the downside.”