Oil costs get a lift from dangers to international provides
Oil futures ended higher on Monday, offset by risks to global supplies as Iraq reportedly plans to cut production and Libya sees disruption to crude oil exports due to a wage dispute.
“Iraq, amazingly for colleagues who had almost lost hope of compliance, promised to reduce its oil production in January and February to make up for the quota exceeded in 2020,” said Björnar Tonhaugen, Head of Oil Markets at Rystad Energy. daily comment.
Iraq plans to produce 3.6 million barrels of oil per day in January and February. That would fall below the 3.86 million barrels a day under the agreement between the Organization of Petroleum Exporting Countries and its allies, a group called OPEC +. The deeper cuts aim to offset the country’s overproduction in 2020.
“If Iraq manages to cut production to this level, it would be the lowest production we have seen from them since 2015,” Warren Patterson, director of raw materials strategy at ING, said in a note. “Given that Iraq has missed out on production cuts, there is no guarantee they will achieve that goal.”
West Texas Intermediate Crude CL.1, + 0.90% CLH21, + 0.90% for delivery in March rose 50 cents, or 1%, to trade at $ 52.77 a barrel on the New York Mercantile Exchange. March Brent crude oil BRNH21, -0.07% BRN00, -0.07%,
The global benchmark was up 47 cents, or almost 0.9%, to $ 55.88 a barrel at ICE Futures Europe.
“Markets can only benefit from more production restrictions as bearish signals come from the demand side, Covid-19 infections continue to increase worldwide and the refinery maintenance season approaches,” said Tonhaugen.
After all of OPEC + ‘s cut in oil production, “the alliance could finally decide that it is time to get their oil machine back on track and the market could go into a big shock,” he said, possibly suggesting a fall in oil prices. “For dealers, this moment can be expected to be a few months away.”
Meanwhile, Reuters reported that Libya’s Petroleum Facilities Guard had suspended all oil exports from the ports of Ras Lanuf, Es Sider and Hariga due to a wage dispute.
According to Patterson, Libya had previously seen an “extraordinary” recovery in oil production, reaching more than 1.2 million barrels a day in December, after producing less than 100,000 barrels a day in August.
Back in the US, President Joe Biden is pushing for swift approval of his proposed $ 1.9 trillion pandemic relief package. “A development that is interpreted by the market as a clear indication that the new US administration wants to initiate an economic recovery that will of course benefit fuel consumption,” said Tonhaugen.
Petroleum product prices also ended higher on Monday, with gasoline RBG21 up + 0.68% up 0.8% to $ 1.5611 per gallon in February and heating oil HOG21 up + 1.10% up 1.1% in February % to $ 1.5939 per gallon.
February NGG21 natural gas, + 6.66%, was $ 2.602 per million UK thermal units, up 6.4%. The Energy Information Administration reported last week that US fuel supplies fell 187 billion cubic feet for the week ending January 15, which is higher than the average decline over the past five years, analysts said.