Wednesday, September 30, 2020
Home > Production > Oil slips on Fed outlook, Libya support

Oil slips on Fed outlook, Libya support

London: Brent oil slipped towards $109 on Thursday after the US Federal Reserve’s latest policy statement was less dovish than some had expected, prompting fears an easy money regime that had supported commodities may soon end.

Brent was still set to end October, however, with its fourth monthly gain in five months as disruptions to shipments from major producer Libya kept supply tight.

“The Fed was less dovish than thought, and some think that tapering (of monetary easing) could come as soon as December,” Carsten Fritsch, an analyst at Commerzbank in Frankfurt, said.

“But ongoing supply disruption in Libya should limit any downside.” Brent crude for December delivery was down 18 cents at $109.68 a barrel by 1227 GMT. The benchmark was on track for a 1.2 percent gain in October.

US crude was down 62 cents at $96.15. The US

benchmark was on course for a fall of over 6 percent for October, its biggest such drop in a year, as stockpiles have increased in the world’s top oil consumer.

US crude’s losses widened its discount to Brent to as much as $13.60 per barrel earlier in the day, its widest in over six months.

Libya hopes to resume oil exports from its Mellitah port within 10 days, a government official said, but the current level of shipments of around 150,000-200,000 barrels per day is a fraction of its 1.25 million bpd capacity.

Strikes and protests by militias and minorities demanding more political rights or better pay have shut much of the Opec member’s oil output.

Oil stocks at Cushing, Oklahoma – the delivery point for US oil futures – rose by more than 2 million barrels last week, the largest build since December 2012, according to data from the US Energy Information Administration.

The data, released on Wednesday along with figures showing the largest six-week increase in overall US inventories since April 2012, helped widen the spread between WTI and Brent to $13.36 overnight. That gap hit $13.40 on Oct. 23, the biggest since early April.

“While we continue to get numbers that support the evidence that there is an excess of supply, we’re looking for demand to ramp up to clear that inventory,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.

US oil touched a four-month low of $95.95 last week but has since regained some ground on expectations demand will pick up as US refineries emerge from their maintenance season.