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Oil prices fall after Libyan oilfields restart

Oil prices

Oil prices fell in trading on Thursday after Libya announced its two oilfields shut down by pipeline protests were back online. ConocoPhillips photo.

Oil prices down over 1 per cent

Oil prices fell over one per cent in trading on Thursday after it was reported that two key Libyan oilfields began pumping crude after pipeline protests in the African nation were shut down.

Brent crude fell $1.22/barrel to $51.17 by 1:20 p.m. EDT and US light crude was down $1.25 to $48.37.

Reuters reports Libya’s two oilfields, the 300,000 b/d Sharara and the 90,000 b/d El Feel oilfields have been restarted, bringing the country’s production to 491,000 b/d.  Libya is hoping to boost its production to 800,000 b/d soon and further increase output to 1.1 million b/d by August, according to the chairman of the state-owned National Oil Corporation.

The news out of Libya was a factor in pushing Brent below its 200-day moving average at $51.29/barrel.

“The 200-day had been a bullseye and today we fell through it. So to me that could be a bullish omen,” Anthony Headrick, energy market analyst at CHS Hedging told Reuters.

US gasoline futures also fell on Thursday, down to the lowest in eight years for this time of year after reports that inventories increased the most in nearly three months, but demand was weak.

US gasoline RBc1 fell almost three per cent to $1.5458/gallon, the lowest since 2009 for this time of year.  At the same time, data shows record US refinery throughputs last week resulted in the biggest jump in gasoline inventories in three months despite a two per cent drop in demand on the year.

“Gasoline is leading the way lower with ample stocks, lower demand compared to last year, and an increase in gas(oline) stocks on the east coast,” said Headrick.

The drop in gasoline futures pushed the gasoline crack spread, an indication of refining profit margins, to an eight-year low.

The Organization of Petroleum Exporting Countries and Russia are discussing extending the OPEC supply cut agreement to the end of the year.  The pact to cut 1.8 million b/d was to end at the end of June.

OPEC’s President Khalid al-Falih is hoping to get a consensus on prolonging the deal before the group meets in Vienna on May 25.

 

 

 

 

 

Posted in: Energy Financial

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