Reuters logo
UPDATE 4-Oil up towards $108 on as caution on Libya prevails
January 9, 2014 / 6:16 AM / 4 years ago

UPDATE 4-Oil up towards $108 on as caution on Libya prevails

* U.S. crude stocks fall, but rise at Cushing hub

* Brent premium to U.S. crude hits highest since early December (Adds euro zone data, Brent premium over U.S. crude, updates prices)

By Simon Falush

LONDON, Jan 9 (Reuters) - Oil rose towards $108 a barrel on Thursday, as caution prevailed on prospects for a solution to Libya’s oil exports deadlock.

Brent crude for February delivery was 69 cents higher at $107.84 per barrel at 1047 GMT, after settling 20 cents lower the day before.

Brent prices fell as much as $6 per barrel last week, after Libya said it would restart its key El Sharara oil field.

It 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 Reuters on Wednesday.

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 expectations that exports would quickly surge back towards the 1.4 million barrels per day before strikes at oilfields began last July had evaporated 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 and 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 on 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 and the Libyan navy firing warning shots near a tanker it said was trying to load oil illegally.

U.S. oil was up 43 cents at $92.76. The contract shed $1.34 to end at a six-week low on Wednesday as a large build in crude stockpiles at the contract’s delivery point in Cushing, Oklahoma, weighed on the market.

The worries about Libya and building U.S. stocks helped to push Brent to its highest premium to U.S. crude since early December, above $15 per barrel CL-LCO1=R.

While 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.

Stronger than expected euro zone economic morale data, which reached its highest in 29 months, also helped to push demand sensitive assets like oil higher.

Investors will look to U.S. non-farm payrolls on Friday for signs of continued recovery in the world’s largest economy, which may bolster speculation over imminent cuts in the Federal Reserve’s commodity-friendly stimulus programme. (Additional reporting by Jacob Gronholt-Pedersen in Singapore; editing by William Hardy and Keiron Henderson)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below