Oil Seesaws, Seeking Direction
By Alison Sider and Christopher Alessi
Oil prices wavered between gains and losses Monday morning on the back of halted production at a Libyan oil field and an unexpected drop in U.S. crude stockpiles.
U.S. crude futures recently rose 1 cent to $63.56 cents a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 7 cents to $67.24 a barrel on ICE Futures Europe.
Oil prices have gained more than 7% over the past two weeks, following a more-than-12% selloff at the start of the month amid fears of surging U.S. shale production.
"I think the market is looking for sustainable direction," said Donald Morton, senior vice president at Herbert J. Sims Co., who oversees an energy trading desk. "I think the market's a little ahead of itself -- it had a pretty good rally, and I think it's time to take a breather."
Supporting prices, Libya's National Oil Co. on Friday declared force majeure on exports from the el-Feel oil field in the south of the country. The 60,000-barrel-a-day field was shut down and evacuated following a violent protest by a unit of local guards.
"Given the ongoing political situation in the country, production levels may remain volatile," Jan Edelmann, a commodities analyst at HSH Nordbank AG, said of reduced supply out of Libya.
Meanwhile, the U.S. Energy Information Administration said Thursday the amount of crude oil in storage fell by 1.6 million barrels in the week ended Feb. 16. The surprise decline followed weeks of crude inventory builds in the U.S. that, along with rising production, had weighed on prices.
"Total U.S. commercial oil stocks subsequently dipped below the five-year average for the first time in nearly four years," according to Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
But oil continues to be hemmed in by the competing forces of cutbacks by the Organization of the Petroleum Exporting Countries on one side, and resurgent U.S. output on the other. Ongoing rhetoric from OPEC and its partners about its commitment to cutting crude production have kept prices from falling too far, but analysts said OPEC's rhetoric is having a more muted effect at higher prices.
"Elsewhere, Saudi Arabia reaffirmed the country's stance on a gradual end to the current OPEC deal, though the ability of OPEC to talk prices higher at current levels remains limited," analysts at Schneider Electric wrote in a client note.
OPEC and 10 producers outside the oil cartel, including Russia, have been holding back crude output by 1.8 million barrels a day since the start of last year. The agreement, which is scheduled to last through the end of 2018, helped bolster crude prices by more than 50% in the second half of last year.
Gasoline futures rose 0.49% to $1.8173 a gallon. Diesel futures rose 0.26% to $1.9746 a gallon.
Write to Alison Sider at firstname.lastname@example.org and Christopher Alessi at email@example.com
(END) Dow Jones Newswires
February 26, 2018 11:00 ET (16:00 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.