When the Syrian crisis is all set to be solved peacefully and there seems a less likelihood of any oil crisis in the Middle-East, the benchmark oil for October delivery was down 31 cents to $106.09 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange, and in Friday’s trading oil prices extended losses in Asian trade.
Energy market observers believe that the slashing down of oil prices can be attributed to several factors that mellowing down of the Syrian crisis as for them it is also due to the news that Libya has resumed some oil production. In the after effects of the news, New York’s main contract, West Texas Intermediate (WTI) for October, sank $US1.17 to close at $US105.42 a barrel.
Libya Resumes Some of Its Oil Production
WTI recorded a second weekly loss as Libya’s oil output recovered. It also happened due to less likelihood of any military strikes against Syria and smooth supply from the Middle-East. Similarly, Brent North Sea crude for delivery in November also slid to $US108.88 and finally settled at $US108.19 in London trade.
Thus, apart from mellowing of Syrian crisis, it is the Libya news that has led Oil markets to retreat. A state-run news agency reported that output of over 400,000 barrels per day from two fields had resumed.
Various other estimates say that Libya’s production will rise to 700,000 to 800,000 barrels per day as its El Feel and Sharara oil fields have reopened. There was a long sit in by the employees working in the oilfield which was then aggravated by some Islamist groups joining them. Now that the El Feel and Sharara oil fields will be pumping the oil, it is good news for the oil market.
Whereas wholesale gasoline was almost unchanged at $2.68 per gallon, the prices of natural gas fell by 0.8 cent to $3.712 per 1,000 cubic feet. Similarly, heating oil was steady at $3.005 per gallon after the Thursday’s news that U.S. has called on the U.N. Security Council to back the U.S-Russia deal for peaceful settlement of the Syria crisis.
Oil prices fell further as the risk of any instability in the oil-rich Middle East has been delayed for some more time. Though the US has not yet ruled out for armed attack as it has cleared that if Syria does not follow the U.S.-Russia deal, it may unilaterally act against Syria, gestures from the Assad government are positive as it has accepted the deal for peaceful surrender of chemical weapons.