Oil Falls to 1-Month Low as Nigeria, Libya Poised to Swell Glut

LAGOS, Capital Markets in Africa: 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 as much as 2.7 percent on the New York Mercantile Exchange. 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 today or 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 Organization of Petroleum Exporting Countries and Russia would agree on measures to stabilize the market at a meeting in Algiers later this month. All 14 members will attendthe Sept. 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 98 cents, or 2.2 percent to $42.93 a barrel on Nymex at 9:46 a.m. Futures reached $42.74, the lowest since Aug. 11. Prices are down 6.4 percent this week. Total volume traded was 11 percent above the 100-day average.

Libya Ports
Brent for November settlement declined 82 cents, or 1.8 percent, to $45.77 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $2.16 premium to WTI for November delivery.

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 Saturday at the latest, according to the official, who helps organize 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 Corp. was said to be ready to resume shipments of Qua Iboe crude, while Royal Dutch Shell Plc lifted a force majeure on ts Bonny Light crude. Force majeure is a legal clause that allows companies to halt shipments without breaching contracts.

World Oversupply
World oil stockpiles will continue to accumulate through 2017, a fourth consecutive year of oversupply, according to the IEA. Just last month, the agency predicted the market would return to equilibrium this year.

Gasoline rose for a second day after the restart of a pipeline carrying fuel to New York Harbor was delayed. The projected restart of Colonial Pipeline’s Line 1, which can carry more than 1 million barrels a day of gasoline from the Gulf Coast to the eastern U.S., was pushed back to next week.

“Gasoline is bucking the trend because of the Colonial Pipeline issues and the disruptions at the Whiting refinery, the biggest in the Midwest,” Flynn said. ” The Colonial shutdown will cause shortages in New York while Whiting will do the same in Chicago.”

Gasoline for October delivery climbed 2.18 cents to $1.452 a gallon. The contract touched $1.458, the highest since Aug. 30.

Source: Bloomberg Business News

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