Oil ral­lies as IEA warns of out­put ca­pac­ity lim­its

Oman Daily Observer - - INTERNATIONAL -

LON­DON: Oil prices ral­lied on Thurs­day, re­coup­ing some ground fol­low­ing sharp losses the pre­vi­ous ses­sion af­ter Libya said it would re­sume oil ex­ports.

The rally re­ceived an ex­tra boost from the In­ter­na­tional En­ergy Agency (IEA), which said the world’s oil sup­ply cush­ion “might be stretched to the limit” due to pro­duc­tion losses.

Bench­mark Brent crude oil LCOC1 rose $1.66, or more than 2.2 per cent, to a high of $75.06 a bar­rel be­fore eas­ing back to trade around $74.80 by 08:15 GMT. On Wed­nes­day, Brent had slumped $5.46 or 6.9 per cent. US light crude CLC1 gained 50 cents to $70.88 a bar­rel, af­ter fall­ing 5 per cent the pre­vi­ous ses­sion.

“The mar­ket fell out of bed yes­ter­day as sup­port failed (but was)... prob­a­bly over­done to the down­side,” said Robin Bieber, tech­ni­cal an­a­lyst at Lon­don bro­ker­age PVM Oil As­so­ciates. “Sharp at­tempts to re­cover are to be ex­pected.” An an­nounce­ment by Libya’s Na­tional Oil Corp that four oil ex­port ter­mi­nals were re­open­ing, end­ing a stand­off that had shut down most of Libya’s oil out­put, was a key cat­a­lyst for the price fall on Wed­nes­day, an­a­lysts said.

The re­open­ing will al­low the re­turn of up to 850,000 bar­rels per day of high qual­ity crude oil to in­ter­na­tional mar­kets.

An es­ca­lat­ing Us-china trade row also helped de­press oil prices as it raised the prospect of fal­ter­ing global growth and lower en­ergy con­sump­tion, par­tic­u­larly in emerg­ing mar­kets.

But Thurs­day brought a more pos­i­tive mood in the oil mar­ket as the IEA re­minded in­vestors of the large num­ber of out­put dis­rup­tions keep­ing pres­sure on global oil sup­ply and prices.

Prices also found sup­port from a US stocks re­port show­ing US crude in­ven­to­ries fell by nearly 13 mil­lion bar­rels last week.

— Reuters

A pump jack lifts oil out of a well, dur­ing a sand­storm in Mid­land, Texas, US.

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