Crude oil declined to its lowest level in almost two weeks in New York as Libya restarted a crude pipeline halted by a fire and the U.S. idled fewer drilling rigs than in previous weeks.
West Texas Intermediate lost as much as 4.2% after falling 4.6% last week. Oil fields in eastern Libya resumed pumping to the port of Hariga after a pipeline was repaired, according to state-run National Oil Corp. The number of rigs targeting oil in the U.S. shrank by 37 to 1,019 last week, the fewest in service since July 2011, data from Baker Hughes Inc. showed on Friday. It was the smallest cut in seven weeks.
“There is still an imbalance between supply and demand,” Jean Medecin, a London-based member of the investment committee at Carmignac Gestion SA, said in an interview on Bloomberg Television’s “On The Move” with Jonathan Ferro. “Probably in less than six months global storage capacity will be filled.”
Rising supply is contributing to a global surplus that drove crude down by almost half in 2014. The Organization of the Petroleum Exporting Countries, whose 12 members ship about 40% of the world’s oil, has signaled that it’s prepared to let prices fall to a level that would force record American output to slow. U.S. drillers have idled rigs the past 11 weeks even as prices recovered.
WTI for April delivery dropped as much as $2.14 to $48.67 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Feb. 11, and traded for $49 at 8:32 a.m. local time. The March contract expired on Friday after decreasing 82 cents to $50.34. The volume of all futures traded was about 69% above the 100-day average for the time of day.
Brent for April settlement slipped $1.42 to $58.80 a barrel on the London-based Intercontinental Exchange Futures Europe exchange. The contract climbed 1 cent to $60.22 on Friday. The European benchmark crude traded at a premium of as much as $9.75 to WTI, the widest gap since March.
Libya, reduced to OPEC’s smallest producer by political turmoil, pumped 300,000 barrels a day in January, according to data compiled by Bloomberg. The Sarir field has resumed limited flows of crude to the port of Hariga, the Lana news agency reported, citing a spokesman from operator Arabian Gulf Oil Co. that it didn’t identify. A pipeline running to Hariga from that facility and neighboring Mesla reopened Sunday, according to Mohamed Elharari, a National Oil spokesman.
Speculators raised bullish bets on WTI for the first time in five weeks as producers curbed new drilling.
Hedge funds and other money managers increased net-long positions in WTI by 2.7% in the week ended Feb. 17, U.S. Commodity Futures Trading Commission data show.
Bullish bets on Brent rose to the 171,412 contracts, the highest since July 8, data from the ICE exchange show. The figure is for options and futures combined.
Oman, the biggest Middle East producer outside of the Organization of Petroleum Exporting Countries, plans to raise output to 980,000 barrels a day this year, Salim Al Aufi, an undersecretary at the Oil and Gas Ministry, said in an interview in Muscat on Sunday. That would be 4% higher than in 2013, according to data from BP Plc.
The U.S. United Steelworkers union plans to restart talks this week to resolve the nation’s largest oil workers’ strike since 1980, according to two people familiar with the talks. The union, representing workers at more than 200 refineries, fuel terminals, pipelines and chemical plants across the U.S., has rejected seven contract offers from Royal Dutch Shell Plc, which is bargaining on behalf of companies including Exxon Mobil Corp. and Chevron Corp.
The strike, which started Feb. 1 at nine sites from California to Texas, has expanded to 12 refineries and 3 other facilities. A deal would end a strike at plants that account for almost 20% of the country’s refining capacity.