- POSTED: 12 Jul 2014 05:40
Global oil prices dived on the prospect of Libyan oil production ramping up after rebels lifted blockades on shipping terminals.
NEW YORK: Global oil prices dived on Friday on the prospect of Libyan oil production ramping up after rebels lifted blockades on shipping terminals.
US benchmark West Texas Intermediate for August plunged US$2.10 to close at US$100.83 a barrel, its lowest level since May 12.
Brent North Sea for delivery in August slid US$2.01 to finish at US$106.66 a barrel in London trade. It was the European benchmark futures contract's lowest close since April 7.
"The petroleum markets are under ongoing selling pressure as traders react to the decline in price by selling more, even in the absence of fresh compelling bearish news," said Tim Evans of Citi Futures.
Evans pointed to the market's continued focus on the recovery in Libyan crude oil production.
But he noted that most of the news this week "has just been confirmation that export terminals have reopened and that output is gradually rising as the result of the political cooperation announced more than a week ago."
Libyan production has been severely limited for a year after rebels blockaded terminals as part of a campaign to restore autonomy in the country's eastern region.
Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at consultancy firm EY, said oil prices were weighed down by the imminent return of disrupted Libyan exports into a global market already flush with supply.
The ports at Ras Lanuf and Al-Sidra could add about 500,000 barrels of crude per day to global energy markets, analysts say.
Output in Sharara, the site of Libya's largest oil field, is reaching its maximum production capacity of 340,000 barrels, just days after it reopened following a deal between rebels and the government, The Wall Street Journal reported.
Unaffected production in violence-hit Iraq has also had a bearish impact on oil prices, Gupta said.
"Indications that Iraqi oil exports from the southern part of the country remained insulated from the sectarian violence that has swept the north in recent weeks also weighed down prices," he said.
Iraq is the second biggest producer in the 12-nation OPEC oil cartel, pumping 3.4 million barrels a day and possessing more than 11 per cent of the world's proven reserves.