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Oil prices up on Libya unrest, hopes for output deal

Monday, September 19, 2016 - 21:18

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World oil prices advanced Monday as fresh fighting in Libya further stoked supply concerns, while Opec member Venezuela indicated a deal to limit output is close.

[LONDON] World oil prices advanced Monday as fresh fighting in Libya further stoked supply concerns, while Opec member Venezuela indicated a deal to limit output is close.

Around 1130 GMT, Brent North Sea crude for delivery in November was up 58 cents at 6RN3 US$46.35 a barrel compared with Friday's closing level.

US benchmark West Texas Intermediate for October added 59 cents to US$43.62 a barrel.

Gains were "sparked by news from Libya, where renewed fighting broke out at the weekend between rival groups over the oil export terminals", said Commerzbank analyst Carsten Fritsch.

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"The expectation of a rapid normalisation of Libyan oil exports is likely to prove illusory, in other words," he added.

"What is more, Venezuela's President Maduro expects Opec to reach an agreement with non-Opec countries before the end of September to stabilise the oil market." Oil fell last week on supply glut woes. However, fighting erupted in Libya on Sunday as UN-backed unity government forces attempted to retake oil ports seized last week by a rival administration.

The fighting led a Maltese-flagged tanker to turn back out to sea for safety, abandoning plans to load crude oil at Ras Lanuf. It would have been the port's first export since 2014.

Libya has Africa's largest oil reserves but has exported only a few tankers of crude in recent months as a result of unrest.

Meanwhile, major crude producer states are due to meet in Algeria next week to discuss the global supply crisis and overproduction that has hammered prices for two years.

On Sunday, Venezuelan President Maduro said participants in the talks - the 14-nation Opec cartel and Russia - are now working on a deal and that he had discussed the issue with his counterparts from Iran and Ecuador.

Without revealing details, Maduro said he hoped to make a firm announcement by the month's end.

An attempt at a oil output deal in April fell apart when Iran, which had just emerged from years of Western nuclear-linked sanctions, refused to take part in Doha talks.

"It is worth taking any reports of a deal to stabilise output with a pinch of salt given the recent ability of Opec alone to agree to such a thing, let alone one that involves Opec and non-Opec members, but the fact that Maduro has claimed it is close does appear to have got people's attention," said Oanda analyst Craig Erlam.

Last week, oil prices had spiralled lower on gloomy market forecasts, profit-taking and ever-present worries over the global supply glut, ahead of the producers' meeting on September 26-28.

New York crude had shed 6.6 per cent in value and Brent fell 4.5 per cent.

Crude has been dogged by a stubborn supply glut since late 2014, with prices hitting near 13-year lows at the start of this year.

Traders are also eyeing a Federal Reserve policy meeting this week for fresh clues about the state of the world's top economy and some guidance on its plans for interest rates.

AFP

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