(For Bloomberg fair value curves, see: CFVL <GO>)
Dec. 16 (Bloomberg) -- Brent crude advanced the most in almost two weeks after Libyan rebels refused to hand over control of three oil ports to the government.
Futures rose as much as 1.8 percent. The North Sea grade slid 2.5 percent last week on speculation that the ports, shut since July, would be reopened. Ibrahim Al Jedran, a Libyan rebel leader, told a news conference yesterday that the oil-export terminals of Es Sider, Ras Lanuf and Zueitina will remain shut after the government rejected his conditions. Output from the country, holder of Africa’s largest proven reserves, fell to 210,000 barrels a day last month, the lowest level since 2011.
“The market thought the recent suggestions of a deal were the most realistic Libyan negotiations have been since July,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a London-based consultant which last week predicted the terminals would probably stay closed. “We had expected a short- covering rally this morning.”
Brent for January settlement, which expires today, gained as much as $1.97 to $110.80 a barrel on the London-based ICE Futures Europe exchange. The more-active February contract traded $1.84 higher at $110.16 as of 1:15 p.m. London time. Brent, used to price more than half the world’s crude, including most exports from Libya, is typically more sensitive to global disruptions than WTI.
WTI for January delivery rose 79 cents to $97.39 a barrel on the New York Mercantile Exchange. The volume of all futures traded was about 5 percent above the 100-day average. The U.S. benchmark crude was at a discount of $13.17 to Brent, compared with $12.35 on Dec. 13.
Libya produced an average of 1.55 million barrels a day in 2010, data compiled by Bloomberg show, and had planned to raise output to 2 million barrels a day through increased exploration. The country is exporting about 110,000 barrels a day from five terminals under government control. Another terminal, Hariga in the east, is under partial government control.
Al Jedran said authorities rejected demands to share oil revenue with his self-proclaimed government and signaled that the eastern region known as Cyrenaica may sell crude without approval. Saleh Al Etweish, the tribal mediator who is trying to end the stalemate, said the government has agreed to Al Jedran’s conditions to set up a committee to monitor oil sales and review past contracts.
“The news out of Libya is a bit of a hiccup,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “What we are seeing is a trader reaction.” The ports remaining shut is “short-term positive” for Brent prices, he said in a phone interview.
Total SA, France’s biggest oil company, is not supplying fuel from all five of its refineries in the country amid a workers strike that has led to two facilities halting production, according to a labor union.
Employees at Gonfreville, Donges, La Mede, Granpuits and Feyzin started industrial action on Dec. 13 because of a pay dispute, according to the CGT. The Gonfreville and La Mede sites are in the process of halting production, Julien Granato, a CGT representative at La Mede, said by phone. An official for Paris- based Total, who asked not to be identified citing corporate policy, declined to comment.
Economists see increased odds that Federal Reserve policy makers will begin reducing stimulus following signs that the labor market is improving and bipartisan passage of a U.S. budget. The central bank may begin reducing its $85 billion of monthly bond purchases at its Dec. 17-18 meeting, according to 34 percent of economists in a Dec. 6 Bloomberg survey, up from 17 percent in a Nov. 8 poll.
The U.S. will account for about 21 percent of global oil demand this year, compared with 11 percent from China, the second-largest consuming country, according to forecasts from the International Energy Agency.
--With assistance from Ramsey Al-Rikabi in Singapore and Morgane Lapeyre in London. Editors: Raj Rajendran, Bruce Stanley