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.”
In Iraq, oil exports have been unaffected by an Islamist insurgency in the north. The country will ship 2.8 million barrels a day this month, close to a record high, loading programs obtained by Bloomberg show.
Arthur, the Atlantic’s first storm of the season, was about 150 miles (240 kilometers) south-southwest of Cape Fear, North Carolina, at 8 a.m. local time with top winds of 80 miles per hour, up from 75 mph earlier, according to a National Hurricane Center advisory.
Arthur would be the first hurricane to hit the U.S. since 2012. Its northward progress is forecast to block a cold front coming across from the west, touching off thunderstorms, gusting winds and possibly hail along the U.S. East Coast including the cities of New York, Boston and Washington.
“The immediate thing that is weighing on oil is the storm,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “That’s depressing the price a little bit.”
Enterprise Products Partners LP and Enbridge Inc. said the 512-mile expansion of its Seaway oil pipeline is mechanically complete, more than doubling the system’s capacity to move oil south from the delivery point for WTI futures in Cushing, Oklahoma.
Enterprise looped the existing Seaway line with a parallel pipe, increasing capacity to the Houston area to 850,000 barrels a day, the companies said in a joint statement.
Inventories at Cushing dropped 1.36 million barrels last week to 20.5 million, the lowest level since 2008.