Oil rose in thin trading ahead of the US Independence Day long weekend as export disruptions in Libya exacerbated global supply concerns.
West Texas Intermediate for July delivery rose 2.52 percent to US$108.43 a barrel, posting a slight weekly gain of 0.75 percent after declining the previous two weeks.
Bent crude for August delivery rose 2.38 percent to US$111.63 a barrel, but dropped 0.44 percent from a week earlier.
Photo: Reuters
Production from OPEC last month dropped by 120,000 barrels a day — the second straight month of declines, a Bloomberg survey found.
Libyan exports have fallen to about one-third of last year’s level after a worsening political crisis prompted the suspension of shipments from two of the nation’s biggest ports.
“Crude prices are finishing the week on a high note as Libya’s political crisis is leading to a steep drop with oil exports. We’ve seen this movie before, and a tight oil market and force majeure at key ports should provide underlying support for oil prices,” Oanda Corp senior market analyst Ed Moya said.
Friday’s rebound comes after crude ended last month down 8 percent from a month earlier as investors fretted over a potential global slowdown.
Oil has increased enough to alarm US President Joe Biden, who is pushing for cheaper gasoline at home, while spearheading efforts to get producers in the Middle East to boost crude output.
Within OPEC, erratic exporter Nigeria drove the loss, with output slumping to a record low. Yet even Saudi Arabia — which Biden is to visit this month — failed to deliver its promised increase. Nigeria’s output dropped by 100,000 barrels per day to 1.2 million per day, the lowest since the country joined the ranks of major producers, data compiled by Bloomberg showed.
Risk of weaker fuel exports is also emerging in India after the government on Friday increased levies on shipments of gasoline and diesel as part of a drive to control a worsening currency deficit. India is a major global fuel supplier and a drop in sales could further tighten markets that have been reeling from reduced Russian shipments.
Still, the market for real crude barrels remains firm. Premiums for North Sea oil remains strong, while crude from Angola is selling fast as European refiners buy more cargoes with supply drying up from some of the continent’s biggest supplies.
The scarcity is highlighted in crude’s futures curve remaining backwardated, where near-term contracts are more expensive than those for later delivery.
Traders are likleyscrutinizing the next moves by OPEC and its allies. While the group this week ratified an oil-production increase for next month, it left the more-pressing issue of future output levels unresolved.
Meanwhile, US demand remains robust as a record number of drivers are expected to hit the road for the long weekend, buttressing gasoline consumption.
Additional reporting by staff writer
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