Oil prices rose on Friday by well over one per cent after reports of a drop in Libyan production and OPEC’s Energy Minister Khalid al-Falih (left) said, while in India, “the oil markets, its clear, are rebalancing”. Narendra Modi Twitter photo.
Oil prices up well over 1 per cent on Friday
Oil prices rose well above $66/barrel on Friday after reports surfaced that production at a large oilfield in Libya was shut down and Saudi Arabia’s energy minister said OPEC’s supply cut agreement is cutting down global crude stockpiles.
By 12:53 p.m. EST, Brent crude was up 78 cents to $66.89/barrel and US WTI rose 85 cents to $63.62/barrel. The Canadian Crude Index climbed $1.22 to $37.51.
Production at the 70,000 barrel per day (b/d) El Feel oilfield in Libya was shut down after the National Oil Company evacuated its workers from the operation after receiving threats from the field’s guards who are currently in a labour dispute with the company.
S&P Platts reports there is talk of disruption as well at the country’s largest oilfield Sharara, which has a capacity of 300,000 b/d. Libyan production is reported to currently be at about 1 million b/d, down significantly from its pre-civil war capacity of 1.6 million b/d.
According to Reuters, while visiting India, Saudi Arabia’s Energy Minister Khalid al-Falih said “the oil markets, its clear, are rebalancing”. He added “Many agencies have documented the decline in inventories and I think that’ll continue in 2018.”
Prices recovered throughout Friday’s session after dropping earlier on reports of rising US production and exports. According to the US Energy Information Administration, crude exports rose to a near record of over 2 million b/d.
“The U.S. is pumping out a record amount of oil,” Naeem Aslam, chief market analyst at Think Markets UK Ltd told Reuters. “The bull rally which we have seen for the black gold could fade away as the U.S. oil production undermines the OPEC production cut commitments,” he added.
US production is expected to top 11 million b/d this year, possibly kneecapping OPEC’s efforts to reduce the global glut of crude.
A rising US dollar also pressured oil prices as crude and other dollar denominated commodities are more expensive for other currency holders.
On Wednesday, the EIA also reported that US crude stocks fell by 1.6 million barrels, mostly due to decreased imports.
Baker Hughes released its weekly rig data on Friday morning. In the United States, the oil rig count rose by one to 799, up 197 over this time last year. In Canada, the oil rig count dropped by nine to 209, up three from the same time last year.