Oil prices gained, reversing their earlier losses as traders weighed concerns on Libyan and Iraqi production against an oversupplied market.
Threats to the Middle East crude production and the dropping count in US oil rigs appeared to spur market bulls despite the global inventory data suggesting an oversupply around 2 million barrels a day.
The Wall Street Journal reported that light, sweet crude for March delivery rose 1.4% or 75 cents at $53.53 per barrel on the New York Mercantile Exchange, the highest since December 30.
The global benchmark, Brent climbed 1.8% or $1.13 to $62.53 per barrel on the ICE Futures Europe.
Dominick Chirichella, senior partner at the Energy Management Institute in New York was quoted by Reuters as having said, “We’re in this mode where the market continues to discount bearish news. Certainly there is some positive news out there about Libya and rest of the Middle East, but I don’t see anything that’s overly bullish.”
Egyptian airstrikes against Libya have added to the country’s turmoil. Libyan oil output is estimated to have dropped to a low of 150,000 barrels per day, down from nearly 900,000 barrels per day in October.
Iraqi, one of the largest Middle Eastern oil producers, has had its crude exports hit by bad weather. This has seen oil exports from South Iraq total to 1.5 million barrels per day in February’s first 10 days, which is about 900,000 barrels per day lower than January, and less than half of the country’s target for the month.
US traders were focused on the growing supply glut. Stockpiles have been on the rise for five straight weeks to a record high of about 417.9 million barrels.
Gasoline futures dropped 2.2% or 3.61 cents to $1.5901 per gallon. Diesel futures gained 0.3% or 0.60 cents to $1.9774 per gallon, the highest settlement from December 23.
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