Oil prices fall after Haftar signals Libya output to resume
Reuters
Published Sep 17, 2020 09:55PM ET
Updated Sep 18, 2020 08:02AM ET
By Shadia Nasralla
LONDON (Reuters) - Oil prices edged lower on Friday after Libyan commander Khalifa Haftar said a blockade on Libyan oil exports, which has been in place since January, would be lifted.
Erasing gains made in earlier Asian and European trading hours, Brent crude (LCOc1) was down 20 cents at $43.10 a barrel by 1125 GMT while U.S. oil futures (CLc1) fell 20 cents to $40.77.
The benchmarks were still set for weekly gains after Hurricane Sally cut U.S. production, Saudi Arabia pressed allies to stick to production quotas and banks including Goldman Sachs (NYSE:GS) predicted a supply deficit.
Haftar's comments came after Libya's National Oil Corporation, not controlled by Haftar, said overnight it would not lift force majeure on exports until oil facilities were demilitarised.
Pre-blockade Libya was producing around 1.2 million bpd. It is unclear, however, how quickly Libya could reach that level again.
Earlier, Goldman Sachs predicted a market deficit of 3 million barrels per day (bpd) by the fourth quarter and reiterated its target for Brent to reach $49 by the end of the year and $65 by the third quarter of 2021.
Swiss bank UBS also pointed to the possibility of undersupply, forecasting Brent would rise to $45 a barrel in the fourth quarter and to $55 by mid-2021.
The Organization of the Petroleum Exporting Countries and other producers, a group known as OPEC+, are cutting output by 7.7 million bpd and stressed at a meeting on Thursday that it would take action against members not complying with the deal.
The Saudi Arabian energy minister said those who gamble on oil prices would be hurt "like hell".
"We think (OPEC+) will put on hold plans to taper the cut down to 5.8 million bpd ... when the entire group convenes again in December," RBC analysts said.
Saudi Arabia said an earlier meeting was possible if oil prices fell alongside demand because of a second wave of coronavirus cases.
"Yesterday’s enthusiasm was not a one-off event. The market now feels the ground more stable to maintain $40+ price levels," said Rystad's Head of Oil Markets Bjornar Tonhaugen.
In the Gulf of Mexico, U.S. producers started rebooting idle rigs following a five-day closure due to Hurricane Sally.
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A tropical depression in the western part of the Gulf of Mexico could become a hurricane in the next few days, potentially threatening more U.S. oil facilities.
Written By: Reuters
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