Oil prices rise on production disruptions in Libya

Oil prices rose on Thursday, extending two days of increases as supply disruptions in Libya lifted the market, although bloated US crude inventories curbed gains.

Brent crude oil was unchanged at $ 52.42 a barrel by 4: 25 pm Beijing time.

West Texas Intermediate ( WTI) crude futures rose $ 0.17 to $ 49.67 a barrel.

The increases extended two days of gains which supported Brent well above $ 50 a barrel and lifted WTI within sight of that level.

Traders said supply disruptions in Libya were lifting the market and that falling US gasoline inventories pointed to a tightening market there despite record high crude stockpiles.

“While crude stocks did build, the build was significantly lower than expected. Product stocks, on the other hand, drew a lot more than expected,” said Sukrit Vijayakar, director of energy consultancy Trifecta. “This information, combined with the supply disruption in Libya was good enough to give the market cause to buy eagerly.”

US gasoline stocks fell 3.7 million barrels in the week that ended March 24, compared with expectations for a 1.9- million barrel drop, the Energy Information Administration ( EIA) said on Wednesday.

US crude inventories, however, rose by 867,000 barrels to a record of nearly 534 million barrels.

Key for the direction of oil prices will be whether an initiative led by the Organization of the Petroleum Exporting Countries ( OPEC) to cut oil production during the first half of the year will be extended, and how high compliance with the reduction targets will be.

OPEC, along with other producers including Russia, aims to cut output by almost 1.8 million bpd during the first half of the year.

OPEC compliance with its targets is expected to be 95 percent this month, up from 94 percent in February.

“This is extremely good for the cartel as it has helped them get a 10- 15 percent increase in prices for 3 months now,” Vijayakar said.