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Oil hits 2015 highs above US$67 as Libyan output slows

Tuesday, May 5, 2015 - 21:00
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Oil prices jumped more than US$1 a barrel on Tuesday, pushing North Sea Brent and US light crude to 2015 highs, after protests stopped crude flows to the eastern Libyan oil port of Zueitina, hampering exports.

[LONDON] Oil prices jumped more than US$1 a barrel on Tuesday, pushing North Sea Brent and US light crude to 2015 highs, after protests stopped crude flows to the eastern Libyan oil port of Zueitina, hampering exports.

Zueitina was one of the few Libyan ports still exporting oil as many others have closed due to fighting or disruptions at oilfields since the ousting of former dictator Muammar Gaddafi. "The protesters closed the pipeline to the port," said Mohamed El Harari, spokesman for state oil firm NOC, adding that several oilfields in eastern Libya would have to close.

Libyan oil output is now below 500,000 barrels per day (bpd), officials say, a third of what the country pumped before 2010.

A strong dollar also weighed on oil, making the commodity more expensive for holders of other currencies.

Brent crude oil climbed to a high of US$67.65 a barrel, up US$1.20 and its highest since Dec 8, before easing back slightly to around US$67.50 by 1215 GMT.

US crude oil jumped US$1.39 to a high of US$60.32 a barrel, also its highest since December. "Momentum is key here," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt. "The rally is feeding itself with a lot of money looking for buying opportunities." "Nothing can really stop the price rally apparently," he told Reuters Global Oil Forum.

Hedge funds and money managers raised bets on rising Brent prices to another record, data showed on Monday, pushing net long positions to their highest since official exchange records began in 2011.

Civil war in Yemen has kept the oil market on edge, underpinning prices due to the risk of disruption to oil supplies from the country's northern neighbour, Saudi Arabia, or other Middle East Gulf producers.

The oil market is extremely well supplied, with producers of the Organization of the Petroleum Exporting Countries pumping almost 2 million bpd more than demand for their oil.

Opec meets next month to discuss production policy but analysts see little chance that it will restrain output as members battle for market share.

Investors awaited data on US crude oil stocks.

A Reuters poll on Monday said commercial crude stocks may have risen by nearly 2 million barrels last week, building for a record 17th straight week.

The US Energy Information Administration will publish its report on oil inventories on Wednesday.

REUTERS

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