Markets

Oil rises on Libyan supply disruptions, likely OPEC output cut extension

Oil rises on Libyan supply disruptions, likely OPEC output cut extension

Brent oil for June delivery on the ICE Futures Exchange in London rose 23 cents, or around 0.5%, to $52.78 a barrel by 9:00AM ET (13:00GMT), after hitting a high of $52.95 earlier, the most since March 10.

Saudi Arabia is eyeing oil at $60 barrel this year, a comfortable price for many OPEC members, but probably not high enough to encourage USA shale producers to significantly increase their rig counts.

Brent crude oil was down 30 cents at.12 a barrel by 0945 GMT.

Oil production from the western Libyan fields of Sharara and Wafa has been blocked by armed protesters, reducing output by 252,000 barrels per day.

The oil market is risking a supply crunch as producers cut spending on major projects to focus on short-term low-priced shale output in the USA, some of the top crude and products traders said.

United States crude inventories rose 867,000 barrels in the week ending March 24, compared with analyst expectations for an increase of 1.4 million barrels.

Oil prices rose after a pipeline halt reduced output in OPEC member Libya, countering concerns that a USA surplus shows little sign of diminishing.

Somali pirates seize oil tanker
Argyrios Karagiannis, the managing director of Flair Shipping, declined AP's request to comment. A search for the ship was under way off the Somali coast on Tuesday.


Analysts polled by Reuters predicted that data will show US crude oil stocks rose 1.4 million barrels in the latest week.

Prices for front-month Brent crude futures, the worldwide benchmark for oil, were at $52.53 per barrel at 0659 GMT, up 11 cents from their last close.

A Reuters survey shows OPEC oil output has fallen for a third straight month in March as members of the group aim to trim 1.2 million bpd during the first six months of this year under a deal signed in November.

OPEC agreed in November a year ago to curb its output by about 1.2 million barrels per day between January and June.

Other oil exporters outside OPEC, including Russian Federation, have also promised to cut production but so far those reductions have been limited.

But as markets remain bloated halfway into the cuts, there is a broad expectation that the supply cuts will be extended into the second half of the year.

Russian Federation has cut crude oil production by 200,000 barrels daily, Energy Minister Alexander Novak said. With OPEC sticking to its output accord and oil-product inventories falling, a "bullish cocktail is in the making". The global benchmark crude was at a premium of $2.71 to WTI.


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