Oil edges up on Libya disruptions, but bloated U.S. market still weighs

OPEC and non-OPEC Joint Ministerial Monitoring Committee (JMMC) had last Sunday agreed to review whether the global deal to curb oil output should be extended by six months.

Overnight, crude futures settled higher on Wednesday, after the latest Energy Information Administration (EIA) report showed a smaller than expected rise in USA crude stockpiles while output disruptions in Libya continued to lift sentiment.

Oil minsters for the three countries commented on Sunday, a day after Algeria's Energy Minister Noureddine Boutarfa called for an extension because he said the strategy is succeeding in paring global inventories.

"Opec and non-Opec made a decision to get ahead of the game this weekend, announcing they are reviewing whether the output curb deal should be extended", said Jeffrey Halley of futures brokerage Oanda in Singapore, adding that this had given crude some support.

In a Bloomberg interview conducted on March 19, Saudi Arabia's Energy Minister Khalid Al-Falih said that oil market fundamentals are moving in the right direction and that OPEC will review the situation no sooner than the middle of 2017. For prices to climb further, demand has to pick up, Bannister said. Permission to use quotations from this article is granted subject to appropriate credit being given to www.theeagleonline.com.ng as the source.

The United States is not a part of the agreement.

The higher prices came despite U.S. crude stocks rising by 1.9 million barrels to 535.5 million barrels.

On the same day, the Brent went up 51 percent to US$50.92 per barrel.

Data from the American Petroleum Institute data showed USA crude stocks rose by 1.9 million barrels to 535.5 million, compared with analysts' expectations for an increase of 1.4 million barrels.

An armed group in Libya shut pipelines Monday because of a dispute over wage issues, disrupting production of 250,000 barrels a day.

Data from the American Petroleum Institute is due at 4:30 p.m.

"And last but not least, US inventory trends - according to the API - have not signalled any lasting oversupply of late, unlike in previous weeks: although USA crude oil stocks have risen, crude oil stocks at Cushing have decreased unexpectedly, and product stocks have fallen further", they said.

OPEC and 11 other leading producers including Russian Federation agreed in December to cut their output in the first half of the year.

Traders also said that their supposedly long positions in crude futures were shrinking as the rising USA drilling activity and production are constantly contributing.

  • Zachary Reyes