Tuesday, 31 December 2013 00:12
LONDON: Brent crude fell below $ 112 a barrel on Monday on early signals that oil output from Libya may be starting to recover.
Output from Libya’s Sarir and Messla oilfields has restarted, although the Hariga port needs to reopen before exports can resume.
The North African OPEC producer has been pumping a mere 250,000 barrels per day (bpd) versus 1.4 million bpd in July before civil unrest disrupted flows.
Brent crude dropped 63 cents at $ 111.55 a barrel at 1304 GMT. US crude was down 52 cents at $ 99.80.
“If Libya does recover and going forward we get more oil back on from Iraq and Iran, then the market should come off,” said Rob Montefusco, oil trader at Sucden Financial.
“But the economy is starting to come back, which should lead to more demand - so things could be finely balanced.” Losses were kept in check by rising violence in South Sudan that is threatening to cut the country’s crude output further. Despite an offer of a truce to end the conflict in South Sudan last week, the country’s army fought ethnic militias over the weekend in a battle that has left at least 1,000 dead and split the oil-producing country barely two years after it won independence from Sudan.
Oil output in South Sudan had fallen by nearly a fifth to 200,000 bpd after the Unity state oilfields shut early last week due to fighting.
Adding further support, US crude oil stocks fell by 4.7 million barrels last week as the Gulf Coast continued to shed inventories, even as US oil production reached a 25-year high.
The price of US crude has increased 8.2% in December due to the falling stockpiles, helping narrow the gap to Brent to as little as $ 8.13 a barrel.