Oil traded above $60 a barrel amid concern about Libyan supply after government forces struck Islamist militias close to the nation’s largest terminal at Es Sider.
Brent gained as much as 1 per cent in London. Libya’s government said its action was prompted by a militia attack on Es Sider, where loadings were halted earlier this month.
Brent for February settlement added as much as 61 cents to $60.85 a barrel on the London-based ICE Futures Europe exchange, and was at $60.79 as of 1:01pm yesterday afternoon.
Oil for February delivery
The European benchmark crude traded at a premium of $4.41 to West Texas Intermediate. Libya supply West Texas Intermediate for February delivery rose 55 cents to $56.39 in electronic trading on the New York Mercantile Exchange.
Islamist militias in Libya who tried to capture the terminal on Christmas Day have been pushed back in fighting that killed four soldiers defending the port, Petroleum Facilities Guard spokesman Ali al-Hasy said.
Three oil tanks were on fire at the terminal, he added. Libya's National Oil Corporation declared force majeure in Es Sider and at Ras Lanuf, the country's third-largest facility, earlier this month.
Production
Libya's output has declined to 352,000 barrels a day, from an estimated 850,000 in October, according to Mohamed Elharari, a spokesman at the state-run National Oil Corporation. That compares with production of close to 1.6 million barrels a day in 2011.
“The situation is getting worse in Libya and we can pretty much write off supplies from there,” Olivier Jakob, managing director at Petromatrix in Zug, Switzerland, said.
"Even without an Opec supply cut, we are getting one from Libya."
Oil futures slumped 45 per cent this year, poised for the biggest drop since 2008, as the Organisation of Petroleum Exporting Countries (Opec) resisted supply cuts to defend market share while the highest US production in three decades exacerbated a global glut.
Economic adviser
Saudi Arabia, Opec's biggest producer, is assuming an oil price of $80 a barrel for 2015, said John Sfakianakis, a former economic adviser to the country's government. This year's average was $103.
Iraq this week approved a budget based on oil at $60 a barrel. The government in Baghdad accepted the "Saudi theory" that Opec should protect its market share and let prices drop to reduce output elsewhere, minister of oil Adel Abdul Mahdi said in an interview this week.
Opec, whose 12 members supply about 40 per cent of the world’s oil, decided at a November 27th meeting to maintain its production target at 30 million barrels a day.
The group pumped 30.56 million barrels a day in November, exceeding its target for a sixth straight month, according to a Bloomberg survey of companies, producers and analysts.
– (Bloomberg)
