Brent Crude Rises Most in Two Weeks as Libyan Ports Remain Shut

Jan 03, 2014 8:34 am ET

Jan. 3 (Bloomberg) -- Brent crude rose the most in two weeks in London, rebounding from yesterday’s drop, as four major ports in Libya remain shut.

Futures gained as much as 0.8 percent. The benchmark lost 2.7 percent yesterday after protesters at Libya’s Al Sharara oil field said they would suspend disruptions for two weeks starting Jan. 1, according to Muftah Lamin, a spokesman for the group. Of the country’s six major oil-shipping ports, Es Sider, Ras Lanuf, Zuetina and Hariga are shut. Libya, holder of Africa’s largest proven reserves, pumped 210,000 barrels a day in December, unchanged from the prior month and the lowest since 2011.

“In Libya, we have seen a few hopes being quashed over the past couple of months,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “It’s a bit like Jerry Maguire saying, ‘Show me the money.’ In other words, is this latest news going to spread to the important east, which is still blocked.”

Brent for February settlement gained as much as 86 cents, the most since Dec. 20, to $108.64 a barrel on ICE Futures Europe in London. The contract traded at $107.98 as of 1:08 p.m. local time.

WTI for February was unchanged at $95.44 a barrel in electronic trading on the New York Mercantile Exchange, rebounding from a drop of as much as 0.3 percent. The U.S. benchmark crude was at a discount of $12.54 a barrel to Brent. The volume of all contracts traded was 21 percent lower than the 100-day average for the time of day, according to data compiled by Bloomberg.

Oil Inventories

The Energy Information Administration will probably report today that U.S. crude stockpiles decreased by 2.83 million barrels to 364.7 million last week, according to the median of eight analyst responses in a Bloomberg survey. The data is scheduled to be released at 11 a.m. today in Washington.

Protesters suspended disruptions at Al Sharara after a meeting with Libya’s defense minister, who agreed to fulfill the group’s demands, Lamin said by phone. Protests will resume at the field if the conditions are not met, Lamin said.

“The restart of Sharara should increase crude-oil output in Libya from about 250,000 barrels a day to about 600,000 barrels a day,” Olivier Jakob, managing director at Zug, Switzerland-based consulting company Petromatrix GmbH, said today in an e-mailed note.

Libya produced an average of 1.55 million barrels a day in 2010, data compiled by Bloomberg show, and had aimed to raise daily output to 2 million barrels via increased exploration. The country exported 249 million barrels of oil, equivalent to 1.05 million barrels a day, from January to November 2013, according to state-run National Oil Corp. Only Zuetina and Mellitah are now operating among Libya’s six major ports.

Dollar Slips

U.S. jobless claims dropped by 2,000 to 339,000 last week, government data showed yesterday, less than the median forecast of 344,000 from economists surveyed by Bloomberg. The dollar declined against a 10-currency basket today after three sessions of gains.

Manufacturing in the U.S. expanded in December at the second-fastest pace in more than two years, separate data showed yesterday. The Institute for Supply Management’s factory index eased to 57 from the prior month’s 57.3, which was the highest since April 2011.

“Cumulative progress and an improved outlook for the job market” prompted the Federal Reserve to slow U.S. economic stimulus, Chairman Ben S. Bernanke said Dec. 18. The Fed will trim monthly bond-buying to $75 billion from $85 billion starting this month.

WTI may decline again next week, a Bloomberg survey showed. Thirteen of 22 analysts, or 59 percent, forecast crude will fall through Jan. 10. Four respondents, or 18 percent, predicted a gain and five said prices will be little changed. Last week, 73 percent of participants predicted a drop.

--Editors: Dan Weeks, Stephen Voss