Oil retreats on hope of fresh Libyan supplies
Oil prices fell yesterday in London, as investors speculated that Libyan production may recover after rebels entered the capital city of Tripoli in a push to force out Muammar Qaddafi.
Brent crude was down as much as US$3.47 to $105.15 a barrel on the ICE Futures Europe Exchange in London, a premium of $23.96 on West Texas Intermediate. Benchmark oil for September delivery was down 25 cents to $82.01 a barrel in electronic trading on the New York Mercantile Exchange.
When the Libyan conflict broke out in February, oil was trading in New York at about $84 a barrel. It quickly rose above $93 and kept rising to a high above $126 at the end of April. Demand from emerging markets including China was also a factor in the rise. Oil has fallen recently along with stocks because of concerns about the global economy.
Oil exports from Libya may resume quickly if rebels finally topple Col Qaddafi, IHS Global Insight told Bloomberg yesterday. Crude exports could rise to as much as 250,000 barrels a day (bpd) within three months if Libyan rebels are able to form a stable government, said Samuel Ciszuk, the senior Middle East energy analyst at IHS Global Insight in London.
Libya used to export about 1.5 million bpd, almost all of which has been cut off. Its output dropped to 100,000 bpd last month. Although Libyan oil amounted to less than 2 per cent of world demand, its loss affected prices because of its high quality and suitability for European refineries.
Meanwhile, Saudi Arabia has tried to make up for the 1 million-plus fewer barrels that were being produced daily, but Libya is known for its light sweet oil, while the Saudis produce the thicker, sourer Brent crude.
Brent, a benchmark for half of the world's oil, advanced by 19 per cent in the first six months of the year as civil uprisings against Col Qaddafi disrupted the country's supply. It has dropped 6 per cent since the start of this month.
Published: August 23, 2011 04:00 AM