Oil Drops Further on Prospective Libyan Field Restart, OPEC Projections

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Oil Drops Further on Prospective Libyan Field Restart, OPEC Projections

Both the US and European crude benchmarks extended their drop after a Libyan official said production in the country’s biggest oil field would resume and OPEC trimmed demand projections for its crude. Prices slid further after a warning that the European Central Bank may trim growth outlook.

WTI plunged as much as 1.4% and Brent sank 1%. ECB President Mario Draghi said rate-setters may inject more stimulus into the economy if necessary and indicated that officials may reduce growth outlook for next month.  OPEC trimmed its projections for the amount of crude oil it expects to sell over the next two decades. A Libyan official said the country may start pumping soon at Sharara, its once biggest oil field before production interruptions.

“Oil’s heading south on the combination of the OPEC report and Draghi’s comments. The Sharara disruption highlights the current chaos in Libya, and also how fragile the production is,” analyst Ole Sloth Hansen of Saxo Bank A/S in Copenhagen emailed Bloomberg.

December-delivery WTI traded at $77.93 per barrel in digital trading on the New York Mercantile Exchange, dropping 75 cents at 1:50 p.m. in London. The contract added $1.49 to $78.68 per barrel yesterday.

December-delivery Brent dropped 59 cents to exchange at $82.36 per barrel on the ICE Futures Europe exchange in London. Brent exchanged at a $4.42 premium to WTI.

If sanctions on Iran are reduced, the supply and demand balance may be affected, Fox quotes Olivier Jacob of Petromatrix as having said.

US Secretary of State John Kerry said it would be more difficult to reach a consensus after a November deadline, signaling a level of urgency before planned negotiations in Oman next week.

Jacob said any easing of restrictions could see up to 500,000 barrels per day of Iranian oil reach the export market in 2015.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com