Oil prices fall further as Libyan supplies to return

3rd July 2014, Comments 0 comments

Oil extended losses on Thursday on prospects that Libya will begin exporting more crude into a global market flush with supplies, while easing concerns about the Iraqi crisis also weighed.

Brent North Sea crude for delivery in August dropped 52 cents to stand at $110.72 a barrel in late London deals.

US benchmark West Texas Intermediate (WTI) for August fell 71 cents to $103.77 a barrel, compared with Wednesday's close.

Prices dropped after Libya's interim Prime Minister Abdullah al-Thani on Wednesday declared that authorities have regained control of export terminals blockaded by rebels.

Crude was down "due to the relatively quiet situation in Iraq and the Libyan port deal, both of which kept supplies up", said analyst Sanjeev Gupta at consultancy EY.

Libyan production has been severely limited for a year after rebels last summer blockaded terminals as part of a campaign to restore autonomy in the country's eastern region.

Its output currently stands at some 320,000 barrels per day, about a fifth of its normal output.

Rebel leader Ibrahim Jodhran said lifting of the blockade on the Ras Lanuf and Al-Sidra terminals was in line with an April deal with Tripoli, and a sign of goodwill towards the new parliament elected last week.

The reopening of the two terminals will "add 500,000 barrels of crude per day into the global energy market", Gupta said.

The government already has control of two other terminals that had been blockaded.

Concerns over a possible supply disruption due to Iraq's security crisis have meanwhile eased, analysts said.

Islamist militants have overrun swathes of territory in Iraq in a lightning offensive since June 9, but have so far not yet directly threatened the key oil-producing region in the country's south.

Oil price losses have been capped, however, by a bigger-than-expected drop in US crude inventories.

The US Energy Information Administration on Wednesday said American commercial crude inventories fell 3.2 million barrels last week, almost twice the amount predicted by analysts.

The US is the world's top oil consumer so any indication of its economic strength is closely watched by investors.

Official data Thursday also showed US employment picked up solidly in June, pushing the jobless rate down to 6.1 percent, boosting confidence in the growth and sending Wall Street stocks flying to new records.

Leaving behind the first-quarter contraction, the economy pumped out a much better-than-expected 288,000 net new jobs last month, Labor Department data showed.

The report sparked fresh buying in the US equity market, boosting the Dow Jones Industrial Average past the 17,000 mark for the first time in history.

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© 2014 AFP

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