• Sunday, July 21, 2024
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Oil edges up to around $107 on supply concerns


Oil edged up to around $107 a barrel on Tuesday, supported by disruptions to supply in Nigeria and Libya, as well as speculation China will act to support its slowing economy.

Royal Dutch Shell declared force majeure on Nigeria’s Forcados crude exports on Thursday, due to a pipeline leak caused by oil theft. In Libya, production will be cut by about 80,000 barrels per day to about 150,000 bpd on Tuesday after a large oilfield was shut.

Brent crude rose 25 cents to $107.06 by 1500 GMT. U.S. crude, also known as West Texas Intermediate, was down 30 cents to $99.30 a barrel.

“Crude oil production in Libya is going from bad to worse and apart from the offshore fields the production in that country is now basically out,” said Olivier Jakob, an analyst at Petromatrix.

Speculation that China, the second-largest oil consumer, will act to boost its slowing economy offered commodities some support. Stronger Chinese growth would probably boost oil demand, as well as use of other commodities such as copper, which also rose on Tuesday.

Libyan output has collapsed from 1.4 million bpd in July because of strikes and protests. As well as actual supply disruption in Africa, threatened concerns over supplies stemming from the Ukraine crisis also underpinned oil prices.

Leaders of the Group of Seven nations, meeting without Russia on Monday, agreed their energy ministers would work together to reduce dependence on Russian oil and gas and increase energy security.

U.S. crude slipped as the Coast Guard said it was preparing for the possible reopening of the Houston Ship Channel, the waterway for tankers supplying more than one-tenth of U.S. refining capacity that has been shut for three days.

Analysts said the closure, due to a spill, had helped to keep a floor under the market.

“The temporary disruption is not expected to last much longer, with the clean-up well under way yesterday,” said Andrey Kryuchenkov, analyst at VTB Capital. “However, it did offer small-scale support to U.S. benchmarks.”

U.S. crude could come under further pressure if oil inventory reports this week show a further increase in U.S. crude stockpiles, which would be a tenth straight weekly gain.

The U.S. Energy Information Administration’s (EIA) supply report is due out on Wednesday. Industry group the American Petroleum Institute is scheduled to release a separate inventory report later on Tuesday.