Oil traded near the highest close in more than two years after an explosion at a pipeline carrying crude to Libya’s biggest export terminal curbed the OPEC nation’s production.
Futures were little changed in New York after rising 2.6 percent Tuesday to the highest level since June 2015. A pipeline run by Waha Oil Company that carries oil to Libya’s Es Sider terminal exploded Tuesday, reducing output by 70,000 to 100,000 barrels a day. Meanwhile, Saudi Arabia is said to expect oil revenue to jump about 80 percent by 2023 to help the kingdom record its first budget surplus in a decade.
Oil is heading for a second yearly advance as the Organization of Petroleum Exporting Countries and its allies including Russia prolong supply curbs through the end of 2018. Prices gained this month after a separate pipe in the U.K. -- one of the most important conduits in the world -- was shut because of a crack. Partial flows have now restarted at the Forties Pipeline System’s Kinneil facility, operator Ineos Group said.
“The pipeline explosion in Libya is a lot more serious as it may take a long time to restore, which can be a long-term driver of oil prices,” Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. “The disruption is considered detrimental enough to dry up some of the global glut.”
West Texas Intermediate for February delivery was at $59.73 a barrel on the New York Mercantile Exchange, down 24 cents, at 11:16 a.m. in Seoul. Total volume traded was about 52 percent below the 100-day average. The contract gained $1.50 to settle at $59.97 Tuesday.
Brent for February settlement lost 34 cents to $66.68 a barrel on the London-based ICE Futures Europe exchange. Prices climbed $1.77, or 2.7 percent, to $67.02 a barrel Tuesday, the highest close since May 2015. The global benchmark crude traded at a premium of $6.94 to WTI.
Output in Libya, where oil fields have endured sporadic shutdowns and disruptions due to protests, power blackouts and fighting, rose to about 1 million barrels a day this year, the highest level in four years. Any drop in production due to the blast that occurred 130 kilometers (81 miles) south of Sidra will ease pressure on OPEC-led efforts to drain a glut.
Under a six-year program to balance the budget, officials predict rising prices and expanded output will push Saudi Arabia’s income from oil sales to 801.4 billion riyals ($214 billion) from 440 billion riyals this year, said people with knowledge of the matter.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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