Oil closed at the lowest in more than a month as Libyan output surged, more rigs were added in the US and Saudi Arabia cut prices to Asian customers.
Futures dropped 1 per cent in New York. Libya is pumping oil at the highest rate since December 2014, Mustafa Sanalla, chairman of the National Oil Corp, said. American drillers increased the number of active oil rigs to the highest level in two years last week, according to Baker Hughes. Saudi Arabia, the world’s largest crude exporter, cut pricing for June exports to Asia as it fights to maintain market share in the region.
Libya is pumping oil at the highest rate since December 2014, Mustafa Sanalla, chairman of the National Oil Corp, said. Photo: Bloomberg
Oil has fallen the past two weeks amid concern growing US output will offset efforts by the Organisation of Petroleum Exporting Countries and its allies to trim a global glut. American production increased to the most since August 2015, and Saudi Arabia’s Energy Minister Khalid Al-Falih has acknowledged that OPEC-led curbs failed in the first quarter. Money managers reduced wagers that oil futures would rise on both sides of the Atlantic in the week to April 25.
“The Libyan production number has grown to 760,000 barrels a day, from 700,000 when I got in today,” Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by telephone. “Saudi Arabia cut the official price to Asia and are aggressively increasing fuel exports, which will boost volumes while allowing them to follow the letter of the agreement.”
West Texas Intermediate for June delivery dropped 49 cents to $US48.84 a barrel on the New York Mercantile Exchange. It was the lowest close since March 28. Total volume traded was about 37 per cent below the 100-day average.
Brent for July settlement fell 53 cents, or 1 per cent, to $US51.52 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a $US2.36 premium to July WTI.
Trading was less active than usual because of the May 1 holiday celebrated in much of the world.
Libya’s crude production rebounded as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after a halt. Clashes between armed groups and closures of fields have disrupted output as the country with Africa’s largest crude reserves struggles to revive its most important industry. Sanalla’s statement comes after Jadalla Alaokali, a board member at NOC, said Sunday that output exceeded 700,000 barrels a day.
“The return of Libyan supply makes the job of OPEC more challenging,” Giovanni Staunovo, a Zurich-based commodities analyst for UBS Group, said by email. “However, renewed supply disruption in Libya remains possible.”
State-owned Saudi Arabian Oil Co, known as Saudi Aramco, lowered its official pricing for Arab Light crude to Asia by 40 cents to an 85 cent discount to the regional benchmark, it said in an emailed statement.
Aramco Trading Co is seeking to increase the amount of refined fuels it buys and sells to more than 2 million barrels a day from the current level of 1.5 million barrels a day, Ibrahim Al-Buainain, chief executive officer of the state oil company’s unit, said in a Dubai interview.
US producers boosted the number of rigs drilling for oil by nine to 697 last week, a Baker Hughes report showed on April 27.
- US crude supplies probably fell last week, while gasoline and distillate-fuel stockpiles rose, according to analysts surveyed by Bloomberg before an Energy Information Administration report on Wednesday
- The market needs more time to start draining stockpiles that are on the verge of declining, Harold Hamm, chief executive officer of Oklahoma-based Continental Resources, said at a conference in Dubai.
- South Korea‘s crude imports fell 7.9 per cent to 82.6 million barrels in April from a year earlier, according to the country’s Ministry of Trade, Industry and Energy