Singapore — Crude oil futures were lower during mid-morning trade in Asia Monday as some supply concerns eased with Libya lifting its force majeure late last week, while markets look ahead to an OPEC technical meeting Wednesday where a decision on individual producer’s quota tracking is set to be taken.
“Expect more oil price volatility as the global oil market can flip from a global supply surplus to a global supply deficit at the drop of a hat, ” Price Futures Group analyst Phil Flynn said in a note.
“The market is trying to assess whether more sources of oil will get us to the point where daily global oil production is once again ahead of our daily consumption,” he added.
At 11:10 am Singapore time (0310 GMT), ICE September Brent crude futures were down 40 cents/b (0.53%) from Friday’s settle at $74.93/b, while the NYMEX August light sweet crude contract was 38 cents/b (0.54%) lower at $70.63/b.
Last Thursday, Libya’s National Oil Corporation said it had lifted the force majeure at the El Feel field in the country’s southwest, with production to ramp up to 50,000 b/d within two days, and 72,000 b/d within five.
However, NOC said Saturday that “unknown armed assailants” entered a substation in the Sharara oil field, in Libya’s southwest, and took four staff members, later releasing two.
The incident prompted the rest of the staff at the facility to threaten a halt to oil production and begin decreasing flows to a minimum, sources told S&P Global Platts.
NOC said wells in the surrounding area were shut as a precaution and all workers evacuated.
“The corporation is liaising with the appropriate authorities to resolve the issue and ensure employee safety,” NOC said, adding that it expects about 160,000 b/d of production to be shut-in until the situation is resolved.
NOC officials did not have any updates when contacted Sunday night.
Meanwhile, the possibility of US President Donald Trump tapping into the country’s strategic reserves to tame crude prices also resulted in the price slide, analysts said.
Reports on “Trump administration was considering drawing on the 660 million barrel Strategic Petroleum Reserve to increase the availability of crude oil in the domestic market spooked investors,” ANZ analysts said.
Market participants were also looking ahead for to an OPEC Joint Monitoring Committee meeting on Wednesday at Vienna.
Iran will send a senior official Wednesday to OPEC headquarters in Vienna to emphasize Tehran’s stance that members should stay within their individual country production quotas or be in violation of the organization’s supply accord, sources told S&P Global Platts.
“The shift from reporting individual country conformity to reporting overall conformity will be adopted to reflect the June 23 decision of the 4th OPEC and non-OPEC Ministerial Meeting that countries will strive to adhere to the overall conformity level, voluntarily adjusted to 100%, as of July 2018,” Saudi energy minister Khalid al-Falih wrote to other members Thursday in a letter seen by Platts.
Iran, Saudi Arabia’s chief geopolitical rival, has insisted that the supply accord would be breached if members exceed their individual caps and infringe on others’ market share, as it faces the prospect of significant losses to its crude oil exports later this year as US sanctions go into force.
As of 0310 GMT, the US Dollar Index was up 0.02% at 94.48.
–Avantika Ramesh, [email protected]
–Edited by Norazlina Juma’at, [email protected]
Source: S&P Global Platts
