West Texas Intermediate or WTI is trading low as it traded hit a four-month low amidst the news that the Libya oil crisis may go haywire. However, a major issue that the WTI is facing is that there are huge crude stockpiles. The U.S. has gained crude stockpiles in huge quantities for a sixth week.
Reportedly, there is not much for WTI in the market as futures changed only a little in New York and in all probabilities will fall consecutively in the second month. Additionally, as supplies were projected to climb by 2.4 million, the crude prices are not expected to increase in the near future despite issues in Libya.
Low Internal Demand in the U.S.
According to some estimates, lower prices of crude are also due to lower demand for crude. Whereas U.S. refineries are producing with their 87.3 percent of capacity, up 1.4 percentage points from the prior week, the consumption of gasoline which peaks during the summer months goes down in September and October.
Currently, the U.S. has huge crude stockpiles which in fact have gone up to the highest level since June. It is up by 11 percent from the five-year average; however, the U.S. will still be the major client for oil as it has more than 21 percent of global oil demand this year which when compared with China’s stands double.
Oil Crisis in Libya
Protests in oilfields in Libya have become a terminal problem since Kaddafi was killed after a civil war. Early this week, Libya’s oil crisis deepened after protesters blocked western fields and denied that an eastern terminal would reopen, frustrating government efforts to end three months of disruptions.
Perennial protests have marred the oil production of the country and now it is able to export less than 10 percent of capacity or 90,000 barrels per day. Hariga Port which is in the heart of exporting activities will not be reopened. Earlier Hariga terminal in Tobruk issued a statement denying that the port was about to be reopened.
Libya, the holder of Africa’s biggest oil reserves, is in turmoil now as the Sharara oil field which started producing oil in tune of 330,000 barrels a day, has now been shut due to protests from the minority Tuareg. It has affected the daily oil production from OPEC which has gone down between 250,000 and 300,000 barrels.
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