Oil Holds Near One-Week High as Libya’s Largest Field Disrupted

(Bloomberg) 

Oil traded near the highest closing level in a week as Libya halted its biggest oilfield and Petro-Logistics SA said OPEC crude supply was on track for its biggest drop in five months.

Futures fell 0.4 percent in New York after rising 3.7 percent the previous two sessions. Libya declared force majeure, a legal clause that allows the suspension of deliveries, on supplies from the Sharara field after it was blocked on Sunday, National Oil Corp. Chairman Mustafa Sanalla said. The Organization of Petroleum Exporting Countries is on track to curb output by 419,000 barrels a day to 32.8 million a day in August, after supplies hit their highest level this year in July, said Geneva-based tanker tracker Petro-Logistics.

Oil in New York has fluctuated below $50 a barrel as investors weigh rising global output against cuts by OPEC and its allies that are taking longer than expected to drain a glut, in part because of increases in Libya and Nigeria. While the U.S. rig count showed declines recently, American output has continued to expand, climbing to the highest level since July 2015.

“The fragility of Libya’s production increase” was highlighted by the problem at Sharara, said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Considering that the political situation and security issues remain unresolved, production gains can be quickly reversed.”

West Texas Intermediate for September delivery, which expires Tuesday, was 19 cents lower at $48.32 a barrel on the New York Mercantile Exchange at 1:42 p.m. in London. Total volume traded was about 30 percent above the 100-day average. Prices advanced $1.42, or 3 percent, to $48.51 on Friday, trimming the weekly loss to 0.6 percent.

Brent for October settlement lost 35 cents to $52.37 a barrel on the London-based ICE Futures Europe exchange. Prices rose 1.2 percent last week. The global benchmark crude traded at a premium of $3.90 to October WTI. It reached $4.06 on Friday, the widest since 2015.

U.S. drillers targeting crude trimmed the rig count by five to 763, the second decline this month, according to data Friday from Baker Hughes Inc. The expansion in American drilling is slowing as output from major shale plays is set to climb to a record next month. The number of active rigs in fields is still near the highest since April 2015, the data show.

Oil-market news:

Libya’s Petroleum Facilities Guard said it’s working to reopen the pipeline linking the Sharara oilfield to the Zawiya export terminal. Royal Dutch Shell Plc, the world’s largest oil trader, is said to have loaded its first crude from Libya in five years over the weekend, according to two people familiar with the matter. The Shell cargo loaded on Saturday is for 600,000 barrels of crude from Libya’s Zueitina port. Iraqi state oil marketing company, known as SOMO, is considering changing the current pricing formula for oil sales to Asian customers, according to traders who asked not to be identified. Total SA agreed to buy the oil and gas unit of A.P. Moller-Maersk A/S, the French company’s biggest acquisition since 1999 and another sign of the accelerating pace of energy deals after a long downturn.