(For Bloomberg fair value curves, see CFVL <GO>)
April 3 (Bloomberg) -- Brent crude rose from its lowest in almost five months amid concern that talks between the Libyan government and rebels won’t restore oil exports. West Texas Intermediate was stable on signs of slower demand.
Brent rebounded 0.6 percent today after settling yesterday at its lowest closing level since Nov. 7. A faction seeking self-rule in eastern Libya hasn’t agreed to return control of Zueitina terminal to the government within days, Ali Al-Hasy, spokesman for the self-declared Executive Office for the Barqa region, said by phone. A gauge of U.S. fuel consumption slid to the lowest level since June, government data showed yesterday.
“Even though the eastern ports issue might get resolved soon, the disruption to oil supply is a different issue altogether,” Abhishek Deshpande, a London-based analyst at Natixis SA, said by e-mail. “We are likely to see outages in oil output which will thereby affect exports unless the demands of the protesters” in other parts of Libya are met.
Brent for May settlement climbed as much as 62 cents, or 0.6 percent, to $104.45 a barrel on the London-based ICE Futures Europe exchange and traded at $104.99 at 2:19 p.m. local time. The European benchmark crude was at a premium of $5.64 to WTI on ICE. The spread shrank for a sixth day yesterday to close at $5.17. The North Sea grade is used to price more than half the world’s oil, including exports from Libya.
WTI for May delivery declined as much as 55 cents to $99.07 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.25 at 2:19 p.m. London time. The contract lost 12 cents to $99.62 yesterday, the lowest close since March 25. The volume of all futures traded was 20 percent below the 100-day average for the time of day.
Libyan rebels were ready to open oil ports within 48 hours, Sliman Qajam, a member of the country’s parliamentary energy committee, had said earlier today by phone from Tripoli. The faction in Libya’s Barqa, or Cyrenaica region, has agreed to open the 200,000 barrel-a-day Zueitina terminal as a “goodwill gesture” following the release of captured rebels, said parliament member Al-Sharif Al-Wafi.
While the latest developments are “having a direct impact on Brent prices,” oil traders have grown accustomed to agreements between the two sides that subsequently collapse, according to Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark.
“It follows the formula,” said Poulsen. “A deal between rebels and Tripoli is agreed. Anything between two hours and three days later they don’t agree on terms anymore. Two to four weeks pass. Rinse and repeat.”
Refiners in the U.S. supplied 18.2 million barrels a day of fuel in the week ended March 28, according to data from the Energy Information Administration yesterday. This indicator, a proxy for demand, was at the lowest level since June last year.
U.S. crude stockpiles shrank by 2.4 million barrels last week, the first slide in 11 weeks, said the EIA, the Energy Department’s statistical arm. Gasoline supplies declined by 1.6 million barrels while distillates, including heating oil and diesel, increased by 554,000 barrels.
WTI advanced 3.2 percent in the first quarter as Russia annexed the Crimean peninsula. Oil has fallen since Russian President Vladimir Putin told German Chancellor Angela Merkel on March 31 that he’d ordered a partial pullout of troops stationed near Ukraine’s border.
North Atlantic Treaty Organization foreign ministers warned after a two-day meeting in Brussels yesterday that any incursion across the frontier would be a “historic mistake.”
--With assistance from Ben Sharples in Melbourne and Maher Chmaytelli in Dubai.