Oil Prices Rise on Libya Unrest
20 September 2016 - 1:12AM
Dow Jones News
By Nicole Friedman, Benoit Faucon and Summer Said
Oil prices edged higher Monday after fighting engulfed Libya's
key Eastern crude-oil ports.
Libyan officials said last week that they planned to ship oil
from a long-closed port, but that shipment was delayed amid
violence over the weekend.
The unrest has heightened investor uncertainty about whether
Libyan oil production, which stands well below the country's full
capacity, can increase. Libyan output now stands at about 300,000
barrels a day, but Libyan officials say they could quickly ramp up
if oil ports remained open and secure for an extended period.
If Libyan production rises, that could weigh on oil prices as a
global oversupply of crude continues to persist.
Following the weekend's fighting, "the expectation of a rapid
normalization of Libyan oil exports is likely to prove illusory,"
said Commerzbank in a note.
U.S. crude for October delivery recently rose 60 cents, or 1.4%,
to $43.63 a barrel on the New York Mercantile Exchange. Brent, the
global benchmark, rose 56 cents, or 1.2%, to $46.33 a barrel on ICE
Futures Europe.
Gasoline futures fell Monday as concerns ebbed that a partial
pipeline outage would cause fuel shortages on the U.S. East
Coast.
The Colonial Pipeline, which ships 2.6 million barrels a day of
fuel from the Gulf Coast to the East Coast, has partly closed its
main gasoline-shipping route for more than week following a leak in
Alabama.
The closure has restricted gasoline deliveries to the East
Coast, particularly in the Southeast, raising prices at the pump
and forcing gasoline suppliers to use ships and other delivery
methods.
Colonial Pipeline Co., which operates the pipeline, started
building a temporary pipeline segment around the site of the leak
over the weekend and expects to restart the shipping route this
week, according to news releases.
Gasoline futures, which jumped 7.4% last week, recently fell
0.8% to $1.4497 a gallon.
In six southeastern states, "gasoline deliveries have all but
halted and inventories at local gasoline racks have quickly been
depleting as panicked motorists fill their tanks, leading to gas
price spikes, supply outages and headaches," said Patrick DeHaan,
senior petroleum analyst at GasBuddy.com, in a note.
Investors are also watching mixed coming from the Organization
of the Petroleum Exporting Countries and other oil-producing
nations ahead of an informal meeting next week.
Members of OPEC, including Saudi Arabia, have voiced support in
recent weeks for a coordinated action to support the price of oil.
But OPEC Secretary General Mohammed Barkindo late Saturday said no
decision would be made at informal talks among the cartel's members
in Algeria next week.
"It is an informal meeting, it is not a decision-making
meeting," he said, dampening hopes that any agreement could be
reached to cap production in order to boost prices.
However, Venezuelan President Nicolás Maduro said members of
OPEC and non-cartel members are nearing a deal on the matter.
"We're close to a deal between OPEC producer countries and
non-OPEC," he told a news conference after meeting with Iranian
President Hassan Rouhani.
Diesel futures recently rose 1% to $1.4186 a gallon.
--
Hassan Morajea
contributed to this article.
Write to Nicole Friedman at nicole.friedman@wsj.com, Benoit
Faucon at benoit.faucon@wsj.com and Summer Said at
summer.said@wsj.com
(END) Dow Jones Newswires
September 19, 2016 10:57 ET (14:57 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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