Oil Rebounds as Libyan Fighting Thwarts Resumption of Exports

LAGOS, Capital Markets in Africa: Oil rebounded from the lowest close in more than a month after clashes halted what would have been the first crude shipment from Libya’s Ras Lanuf export terminal since 2014.

Crude rose as much as 2.6 percent in New York. The tanker Seadelta suspended loading after fighting on Sunday between local Petroleum Facilities Guard units and forces loyal to eastern-based military commander Khalifa Haftar. OPEC may call an extraordinary meeting if ministers reach consensus at informal talks next week, Secretary General Mohammed Barkindo said, according to the Algerian Press Service. Gains accelerated as the dollar fell.

Oil has fluctuated since rallying in August on speculation the Organization of Petroleum Exporting Countries and Russia will agree on measures to stabilize the market at the meeting next week in Algiers. Prices tumbled 6.2 percent last week amid concern the resumption of shipments from Libya, as well as Nigeria, would worsen a global glut.

“We saw the market sell off modestly last week on speculation that the flow of Libyan oil was going to increase, and today’s news makes it clear that supply will be intermittent as far as the eyes can see,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $5.2 billion. “I suspect some of this is positioning before next week, because we really don’t know what OPEC is going to do.”

Dollar Decline
West Texas Intermediate for October delivery, which expires Tuesday, climbed 83 cents, or 1.9 percent, to $43.86 a barrel at 10:55 a.m. on the New York Mercantile Exchange. Futures fell 2 percent to settle at $43.03 a barrel on Friday, the lowest close since Aug. 10. The more-active November contract rose 81 cents at $44.43.

Brent for November settlement advanced 80 cents, or 1.8 percent, to $46.57 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $2.14 premium to WTI for November delivery.

For a story on hedge funds cutting bets on lower and higher prices, click here.

Crude also climbed as the dollar weakened on speculation the Federal Reserve will hold interest rates steady this week. A falling dollar makes raw materials priced in the currency more attractive to investors.

Suspended Loading
The fighting in Libya forced the tanker Seadelta to suspend the loading of 781,000 barrels of oil for shipment to Italy, Nasser Delaab, petroleum operations inspector at Harouge Oil Operations, said by phone. The tanker, which began loading earlier Sunday, sailed away from Ras Lanuf and may return to the port to finish taking on oil on Monday, he said.

Next week’s OPEC gathering will be a “meeting of consultation and not of decision-making,” unlike the group’s meeting in Oran, Algeria, in 2008, when it agreed to cut production, Barkindo said Saturday, according to Algeria’s official news agency.

OPEC members are close to reaching an agreement on how to stabilize the market, Venezuelan President Nicolas Maduro said Sunday at a press conference after speaking to his counterparts from Iran and Ecuador. Maduro said he hopes an accord can be reached by the end of the month.

Source: Bloomberg Business News