Oil prices drop as Libya poised to resume oil exports

A worker maintains oil pipelines at the Zueitina oil terminal in Zueitina. REUTERS/Esam Omran Al-Fetori
A worker maintains oil pipelines at the Zueitina oil terminal in Zueitina. REUTERS/Esam Omran Al-Fetori

Oil fell to a one-month low in New York on speculation that the resumption of shipments from Libya and Nigeria may add to the global surplus.

Futures dropped 2 per cent. Libya and Nigeria, whose supplies have been reduced by domestic conflicts, are preparing to boost exports within weeks.

A tanker that’s supposed to collect crude from a key Libyan terminal for the first time in almost two years should load by Saturday. The oil surplus will last longer than previously thought, the International Energy Agency said Tuesday.

Oil has fluctuated since rallying in August amid speculation the Organisation of Petroleum Exporting Countries and Russia would agree on measures to stabilise the market at a meeting in Algiers later this month. All 14 members will attend the September 27 meeting, according to an official with knowledge of the plans.

“The headlines about Libya restarting shipments from a closed port are sending us lower,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Increased shipments are going to add to the global glut.”

West Texas Intermediate for October delivery fell 88 cents to settle at $US43.03 a barrel on the New York Mercantile Exchange. It was the lowest close since August 10. Prices slipped 6.2 per cent this week. Total volume traded was 5 per cent below the 100-day average.

Brent for November settlement declined 82 cents, or 1.8 per cent, to $US45.77 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a $US2.15 premium to WTI for November delivery.

“Crude prices fell further once the inflation data came out and boosted the dollar,” Flynn said.

The Seadelta is having to wait longer than anticipated to load its cargo from Libya’s Ras Lanuf port for unspecified “technical reasons”, Nasser Delaab, petroleum operations inspector at Harouge Oil Operations, said by phone Friday. The tanker should load Friday or by Saturday at the latest, according to the official, who helps organise oil movements at the port. The tanker, meant to arrive last night, remains at sea, tracking data show.

Libya’s state oil company on Wednesday lifted curbs on crude sales from the ports of Ras Lanuf, Es Sider and Zueitina, potentially unlocking 300,000 barrels a day of supply. In Nigeria, Exxon Mobil was said to be ready to resume shipments of Qua Iboe crude, while Royal Dutch Shell lifted a force majeure on its Bonny Light crude. Force majeure is a legal clause that allows companies to halt shipments without breaching contracts.

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