Oil prices rise on Libyan export interruption

▶ Traders still hedge as concerns over OPEC reductions linger

Oil prices edged up on Tuesday after Libya’s National Oil Company declared force majeure on exports from the El Sharara oilfield, which was seized at the weekend by a local militia group.

Despite that, overall sentiment on oil prices remained weak amid worries over global stock markets, as well as doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.

International Brent crude oil futures LCOc1 were at $60.19 per barrel as of press time on Tuesday.

Libya’s National Oil Company (NOC) late on Monday declared force majeure on exports from the El Sharara oilfield, the country’s biggest, which was seized at the weekend by a militia group.

NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield.

The rise came after crude prices dropped by 3 percent the session before, amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers, including Russia.

Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.

In a show of no confidence, money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending December 4, the US Commodity Futures Trading Commission (CFTC) said on Monday.

The financial speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. That is the lowest level since September 20, 2016.

In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia.

“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” according to Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.