Oil Trades Near $52 as Investors Eye Libyan Crude Output Return

LAGOS (Capital Markets in Africa) – Oil hovered near $52 a barrel as investors eyed the potential return of crude volumes from Libya and await output cuts in January as part of an OPEC and non-OPEC deal.

Futures were little changed in New York after swinging between gains and losses. Libyan oil-facility guards backtracked on an agreement to allow supply to flow from the El Feel and Sharara fields, two of the country’s biggest fields. Investors await production cuts by OPEC and non-OPEC producers starting early next year.

Oil has traded near $50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov. 30 to reduce production for the first time in eight years. Many non-OPEC producers, such as Russia, agreed to join the deal as well. Goldman Sachs Group Inc. last week increased its second-quarter crude-price forecasts and predicted stockpiles would return to normal by mid-2017 amid the curbs.

Click here for updates on OPEC, non-OPEC compliance to the output reduction deal

There are little fundamental drivers until the market can evaluate OPEC, non-OPEC production cuts in January, according to Mike Dragosits, senior commodity strategist at TD Securities in Toronto. “We’re in a pretty quiet period now. What you’re seeing is a reaction to the U.S. dollar flows,” he said by telephone.

WTI for January delivery, which expires Tuesday, fell 5 cents to $51.85 a barrel at 9:58 a.m. on the New York Mercantile Exchange. Total volume traded Monday was about 20 percent below the 100-day average. The more-active February future was down 7 cents to $52.88.

Brent for February settlement dropped 15 cents, or 0.3 percent, to $55.06 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.18 to WTI for the same month.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed, after falling as much as 0.3 percent earlier.

Libyan Output
A group of Libyan guards prevented the flow of oil by pipeline, Khaled Hadloul, an engineer at Mellitah Oil & Gas, which operates El Feel, said by phone. TheRepsol SA-operated Sharara field is also yet to restart because both fields feed into the same pipeline network, Hadloul said.

“We’re watching what’s going on in Libya. That’s pushing around the market, too,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone.

Oil-market news:

• Saudi Arabia crude oil exports fell to 7.636 million barrels a day in October and oil production was 10.625 million barrels a day, according to JODI. Iran crude exports rose to 2.33 million barrels a day that month.
• JPMorgan Chase & Co. increases 2017, Brent, WTI crude forecasts on OPEC deal.
• BP Plc agreed to buy stakes in West African licenses held by Kosmos Energy Ltd. for $916 million as it builds its gas business following an acquisition in Egypt last month. Over the weekend, BP also agreed to swap about $2.2 billion of its shares for a stake in one of Abu Dhabi’s largest onshore oil concessions.