Oil edges higher as halted Libyan exports balance expected OPEC+ supply boost
3:33 pm Monday, September 02nd, 2024
By Nia Williams and Arunima Kumar
(Reuters) -Oil prices edged higher on Monday, recovering some losses from late last week, as Libyan oil exports remained halted and concerns about higher OPEC+ production from October eased.
U.S. West Texas Intermediate crude rose 49 cents, or 0.7%, to $74.04 by 1924 GMT. Brent crude futures settled up 59 cents, or 0.8%, at $77.52 a barrel. Trading volumes were light as Monday marked a public holiday in the U.S. market.
On Friday Brent and WTI lost 1.4% and 3.1%, respectively.
Oil exports at major Libyan ports were halted on Monday and production curtailed across the country, six engineers told Reuters, continuing a standoff between rival political factions over control of the central bank and oil revenue.
The country’s National Oil Corp. (NOC) also declared force majeure on El Feel oil field from Sept. 2.
“The current disturbances in Libya’s oil production could provide room for added supply from OPEC+. But these fluctuations have become quite normal over the last few years, meaning any outages will probably be short-lived; with the news flow indicating signals for a restart of production have already been given,” said Bjarne Schieldrop, chief commodity analyst at SEB.
Libya’s Arabian Gulf Oil Company resumed output of around 120,000 barrels per day (bpd) on Sunday, to feed a power plant at the port of Hariga.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, is set to proceed with planned increases to oil output from October, six sources from the producer group told Reuters.
Eight OPEC+ members are scheduled to boost output by 180,000 barrels per day (bpd) in October as part of a plan to begin unwinding their most recent supply cuts of 2.2 million bpd while keeping other cuts in place until the end of 2025.
News of increased production helped push oil prices lower last week but the scale of the sell-off was overdone, said Phil Flynn, an analyst at Price Futures Group.
“The market over-reacted to how much supply is coming on and now it seems like the market has put that report into perspective,” Flynn said.
However Brent and WTI have posted losses for two consecutive months as U.S. and Chinese demand concerns have outweighed recent disruptions in Libya and supply risk related to conflict in the Middle East.
More pessimism about Chinese demand growth surfaced after an official survey showed on Saturday that manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders.
(Reporting by Nia Williams in British Columbia, Arunima Kumar in Bengaluru and Florence Tan in Singapore; editing by David Goodman, Jason Neely and Aurora Ellis)
