Oil Trades Near $49 as Investors Weight Rising Supply Against OPEC Cuts

(Bloomberg) 

Oil traded near $49 a barrel as Libyan output and exports declined amid security threats and a labor dispute in the port of Zueitina.

Futures fell 0.4 percent in New York after Friday’s 0.5 percent gain. Libya’s biggest oil field cut output by more than 30 percent, a person familiar with the matter said Sunday, while the head of a union said loadings at Zueitina ceased after employees demanded better working conditions. In the U.S., drillers added three crude rigs last week, according to Baker Hughes Inc.

Oil has been fluctuating below $50 a barrel as investors weigh rising global supply against output curbs from the Organization of Petroleum Exporting Countries and its allies. The International Energy Agency reduced its estimates last week for the amount of crude needed from OPEC through 2018 after lowering its assessments of demand in some emerging nations. In Libya, the Sharara field’s output has dropped to 200,000 barrels a day, the person said.

“After months of boosting oil production, Libya currently seems to be experiencing output disruptions,” said Michael Poulsen, an analyst at Global Risk Management Ltd.

West Texas Intermediate for September delivery was at $48.62 a barrel on the New York Mercantile Exchange, down 20 cents, at 1:18 p.m. London time. Total volume traded was about 18 percent below the 100-day average. Prices rose 23 cents to $48.82 on Friday, trimming the weekly loss to 1.5 percent.

Brent for October settlement fell 26 cents to $51.84 a barrel on the London-based ICE Futures Europe exchange, after sliding 0.6 percent last week. The global benchmark crude traded at a premium of $3.07 to October WTI. The spread reached $3.15 on Aug. 10, the widest since December 2015.

Oil-market news:

OPEC last month pumped the most crude this year as supply from Libya, which is exempt from the group’s output-cut deal, rebounded to about 1 million barrels a day. China’s oil refining dropped the most in three years in July, while crude output retreated from the highest this year. U.S. drillers increased the rig count to 768, the highest level since April 2015, according to data Friday from Baker Hughes. Norway’s oil industry said it has some major investments in store if the government can come through with tax incentives. Money managers increased their net-long positions in Brent by the most since December, raising them by 58,255 positions to 400,603 in the week to Aug. 8, according to the ICE Futures Europe. For WTI, hedge fund positions were little changed. Market fundamentals for 2018 have deteriorated in part because U.S. shale producers can hedge profitably at current prices, oil trader Andy Hall said in a letter dated Aug. 1 notifying investors that he was closing his firm’s flagship commodities hedge fund.