West Texas Intermediate crude (NYMEX:CLQ14) fell for a sixth day, marking its longest retreat in more than two years on easing supply concerns in Iraq and Libya. Brent (NYMEX:SCQ14) also declined.
Libya is reopening two oil export terminals in the country’s east after taking control from rebels who have blocked oil shipments for the past year. Fighting in Iraq still hasn’t spread to the south, home to more than three-quarters of its output. WTI also dropped on concern Hurricane Arthur will reduce driving over the Fourth of July holiday.
“The fear about supply disruption in Iraq and Libya is starting to ease,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market is assuming that the southern oil-producing region is not going to be impacted. Arthur is going to be a significant threat to demand.”
WTI for August delivery declined 64 cents, or 0.6 percent, to $103.84 a barrel at 11:04 a.m. on the New York Mercantile Exchange. The contract fell 86 cents to $104.48 yesterday, the lowest close since June 11. The volume of all futures traded was about 10 percent below the 100-day average for the time of day.
Brent for August settlement dropped 53 cents, or 0.5 percent, to $110.71 a barrel on the London-based ICE Futures Europe exchange. Volume was 58 percent above the 100-day average. The European benchmark crude traded at a premium of $6.88 to WTI on ICE. The spread narrowed for a third day yesterday to close at $6.76.
Es Sider and Ras Lanuf, Libya’s biggest and third-largest oil ports, were handed over to government control yesterday after a deal with rebels, according to Ahmed al-Amin, a government spokesman. The two terminals, which can handle a combined 560,000 barrels a day of crude, could boost Libya’s export capacity almost fivefold. Preparations are under way to ensure the ports operate at maximum capacity, the Libyan government said on its website.
“We are in a corrective phase, as a result of no interruption in Iraqi crude supplies and renewed hints that Libyan oil production may rise,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by e-mail. “If Libyan exports do not resume quickly, the market will discard the announcement relatively quickly as it did on previous occasions.”