• Wednesday, February 28, 2024
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Oil up towards $108 on as caution on Libya prevails

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Oil rose towards 108 dollars a barrel on Thursday as caution prevailed on prospects for a solution to Libya’s oil exports deadlock.

Brent crude for February delivery was 43 cents higher at 107.58 dollars per barrel, after settling 20 cents lower.

Libya key El Sharara oil field is now producing around 650,000 barrels per day (bpd) of oil, of which 510,000 bpd is being exported, Oil Minister Abdelbari Arusi told the media.brent_3

This is well up from a trough below 100,000 barrels per day late last year, but still around half of exports before protests paralysed the sector.

Analysts said expectation that exports would quickly surge back towards the 1.4 million barrels per day before strikes at oilfields began last July had evaporated.

The lost anticipation is due to escalating tensions between the Tripoli government and an armed grouping controlling three eastern oil ports.

“The market was too optimistic about developments in Libya.

“It’s clear that the conflict is far from resolved and it’s not going in the right direction,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.

Libya said Wednesday it will stop doing business with, and take to court, any foreign firms trying to buy oil from eastern ports seized by armed protesters.

The statement came after tension built this week with rebels inviting foreign firms to buy crude from them.

The Libyan navy fired warning shots over a tanker trying to load oil illegally.

U.S. oil was up 27 cents at 92.60 dollars.

Meanwhile, the Cushing stocks rose, total U.S. crude stocks fell by 2.7 million barrels in the week to Jan. 3, data from the U.S. Energy Information Administration (EIA) showed.

Overall U.S. crude inventories fell for the sixth straight week, totalling 33.5 million barrels for the period, the largest six-week drop since October 1990.

Still, the commercial stocks remain near historical highs due to growing U.S. oil output.

Gains in Brent were limited by a stronger dollar, which hovered near a seven-week high against a basket of major currencies.

A stronger dollar makes commodities priced in the greenback more expensive to holders of other currencies.

Investors will look to U.S. non-farm payrolls on Friday for signs of continued recovery in the world’s largest economy.

These signs may bolster speculation over imminent cuts in the Federal Reserve’s commodity-friendly stimulus programme.

Reuters