Brent crude oil rose to around $60 per barrel this morning, supported by concerns about disruption to output from Libya, but Reuters reports a global supply glut is keeping prices nearly 50% off their peak for the year.
Libya is producing a scant 128,000 barrels of oil a day from fields connected to the far eastern port of Hariga, an oil official says, as fighting kept its largest ports, Es Sider and Ras Lanuf, shut. The OPEC member nation has struggled with port blockades and protests, slashing output from the 1.6 million barrels a day it produced prior to the 2011 ousting of leader Muammar Gaddafi.
A fire sparked by a rocket attack last week on storage tanks at the port of Es Sider marked an escalation in damage to the country’s oil infrastructure.
“There’s tension in Libya, but liquidity is very thin so not much is needed to move oil prices,” says Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
Trade was sparse this morning, with many investors away for the holidays. Van Cleef says that the overall picture remains bearish, with traders looking for reasons to sell.
“It’s very supply driven. On the demand side, the only impact is when you see a negative change in data.”
Brent crude was up 35 cents at $59.80 as of 9:40 a.m., after hitting $60.43 earlier in the morning. Brent is down around 46% since a year high above $115 per barrel hit in June. It has been weighed down by a decision taken by OPEC in November not to cut supply to address the slump in prices, as well as comments made by Saudi Arabia officials since the OPEC decision expressing their comfort with lower prices.
Oil is on track for its biggest fall this year since 2008 and the second-biggest annual fall since futures started trading in the 1980s.
