Oil Prices Steady as Libya Supply Disruption offsets China’s Low Demand
Oil prices have remained steady as Libya was forced to halt some exports and as manufacturers in China prepared to reopen factories after a nearly three-week COVID-19 shutdown in Shanghai.
Brent rose 21 cents, or 0.2%, to $113.37 a barrel while U.S. West Texas Intermediate (WTI) crude (CL1!) futures slipped 2 cents to $108.19 a barrel.
Both benchmark contracts rose more than 1% in the previous session after hitting their highest since March 28 after Libya said it could not deliver oil from its biggest field and shut another field due to political protests.
The latest supply hit came just as fuel demand in China, the world’s largest oil importer, was expected to pick up as manufacturing plants prepared to reopen in Shanghai. Demand concerns remain, however, as China continues to impose tough curbs to contain COVID outbreaks.
“We are still in a tractor pull between global supply deficits and China’s COVID demand crunch at the end of the day,” SPI Asset Management’s managing director, Stephen Innes, said in a note.
Meanwhile, the possibility of a European Union ban on Russian oil for its invasion of Ukraine continues to keep the market on edge. On Tuesday Ukraine said Russia, which calls its actions a “special operation”, had started an anticipated new offensive in the east of the country.
“Market sentiment was supported by the Russian minister saying more countries banning Russian oil imports would mean oil prices exceeding historic highs,” ANZ Research analysts said in a note.
WTI crude for May delivery closed up US$1.26 to US$108.21 per barrel, MarketWatch reported. June Brent crude, the global benchmark, was last seen up US$1.01 to US$112.71, while Western Canada Select was up US$1.98 to US$95.94 per barrel.
China reported its economy expanded 4.8% in the first quarter, unchanged from the year-prior quarter, though the New York Times noted most of the growth was concentrated in January and February, while growth slowed in March as the country imposed lockdowns to slow a rapid rise in Covid-19 infections, including on the commercial centre of Shanghai, a city of 25-million.
Weak demand from China is being offset by supply disruptions from Libya, as the country’s National Oil Corp declared force majeure at an export port after protests over cancelled elections shut down its largest oil field.
“Crude Oil is up today on political instability in Libya that has shut in anywhere from 500,000 to 800,000 bpd of Crude Oil…shut-in barrels when the market could least afford it.
“Libya’s largest field, Sharara, has been closed, with Libyan officials declaring force majeure on deliveries of the country’s premium light crude oil. Tribal leaders have shut production at the wellhead in southern Libya, with protesters shutting down deliveries at ports along the coast.
“Libya was producing at a rate of around 1.2 million bpd in 2021, but had been pumping at around 1 million bpd in recent months because of political upheaval even before the current crisis,” Robert Yawger, executive director for energy futures at Mizuho Securities USA, said in a note. #Oil Prices Steady as Libya Supply Disruption offsets China’s Low Demand
