London, March 28, 2017 (TNE) A severe disruption to Libyan oil supplies and comments from officials suggesting OPEC could extend its production cuts deal to the end of the year, boosted oil prices on Tuesday.
But prices were still weighed on by resurgence in U.S. oil production and the expectation that inventories there would build up once again.
Prices for front-month Brent crude futures LCOc1, the international market benchmark, gained 55 cents to $51.30 per barrel by afternoon, while West Texas Intermediate (WTI) were up 50 cents at $48.23 a barrel.
Both Brent and WTI jumped by over 20 cents a barrel after a local industry source said Libya’s oil output had fallen by roughly a third, or 252,000 barrels per day (bpd).
The fall was due to production blockage at the Sharara and Wafa oil fields.
“A number of bullish developments are helping oil regain some poise this morning, chief among which is the latest disruption in Libya,” PVM analysts said in a report.
“A further tailwind for prices was provided by comments from the Iranian oil minister in which he hinted that an extension to OPEC-led cuts is likely.”
The comments from Iranian Oil Minister Bijan Zanganeh were followed by a statement from non-OPEC member Azerbaijan that said it was ready to join an extension of the deal into the second half of this year.
Nevertheless, Saxo Bank Head of Commodity Strategy Ole Hansen said supply remained in focus ahead of the U.S. Energy Information Administration oil stocks report. (TNE)