Crude capped its longest run of gains this year as Libya’s biggest oil field suffered another outage, while Russia signaled it’s weighing an extension of OPEC-led production cuts.
Futures rose for a fifth day in New York, adding to the 3.2 percent gain last week that followed a U.S. military strike on Syria. Libya’s Sharara field halted output just a week after reopening, with the National Oil Corp. declaring force majeure on exports, according to a copy of its decree obtained by Bloomberg. Russia’s Energy Minister Alexander Novak said Friday his ministry had been in talks with oil companies regarding the need to prolong the six-month deal with OPEC.
Support from some members of the Organization of Petroleum Exporting Countries to extend the curbs triggered a rally above $50 a barrel in the past two weeks. The cuts have stabilized the market and Russia will continue to watch inventory levels, but it’s too early to decide whether the pact should be prolonged, Novak said. Libya, an OPEC member that’s exempt from the accord, said Sharara had been pumping 200,000 barrels a day before the latest disruption. A week earlier, exports were interrupted by a pipeline halt.
“The Libyans are constantly shutting and reopening their fields because of political and technical issues,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The talk of an extension, strength of the U.S. economy and ongoing minor supply problems like Libya are leading people to think the market will probably be getting tighter.”
West Texas Intermediate for May delivery climbed 84 cents, or 1.6 percent, to settle at $53.08 a barrel at on the New York Mercantile Exchange. It was the highest close since March 7. Total volume traded was about 5 percent below the 100-day average.
Buzzard Resumption
Brent for June settlement rose 74 cents, or 1.3 percent, to $55.98 a barrel on the London-based ICE Futures Europe exchange. It’s the highest close since March 6. The global benchmark oil ended the session at a $2.50 premium to June WTI.
Production from the Buzzard field in the North Sea returned to full capacity late Saturday morning, according to a person with knowledge of matter. The field was shut on April 2 following an unplanned outage.
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Russia, which pledged to trim output by as much as 300,000 barrels a day by the end of this month, will make a decision on prolonging the curbs after “monitoring results in April and May,” according to Deputy Prime Minister Arkady Dvorkovich. Cuts so far haven’t delivered the expected price boost, he said at an Energy Ministry conference Friday in Moscow. Russia and 10 other non-OPEC members joined the group in cutting output from January.
Stockpile Draws
U.S. crude and fuel inventories probably declined last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday. Explorers in the U.S. increased the oil rig count last week to the highest level since August 2015. U.S. drillers targeting crude added 10 rigs to 672, according to data Friday from Baker Hughes Inc.
“We’re looking for an overall petroleum draw,” Kyle Cooper, director of research with IAF Advisors in Houston, said by telephone. “There should finally be a small drop in crude supplies, and between decent demand and strong exports there will probably be another draw in the products.”
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