By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Brent crude oil climbed up more than $1 to around $60 a barrel on Tuesday on Libya’s largest oilfield shutdown, a Reuters report said.
According to the report, the Sarir oilfield in Libya shut because of a power cut, in a further blow to exports from the country.
The report says Brent for April was up $1.10 at $60.00 a barrel by 1435 GMT, recovering from an earlier low of $58.10. U.S. crude was up 60 cents at $50.05.
It affirmed that traders and analysts said that while lower output from Libya was providing some support, fast-rising oil stocks in the United States still pointed to a market that was heavily over-supplied.
The report further affirmed that the market traders awaited U.S. oil inventory data due later on Tuesday and on Wednesday to see whether it would show another large increase.
Carsten Fritsch, seniour oil and commodities analyst at Commerzbank in Frankfurt said the fundamental backdrop is still bearish, “there was a huge over-supply in the market,” Fritsch added.
The report said a Reuters survey forecast that figures from the American Petroleum Institute on Tuesday, and the U.S. government’s Energy Information Administration on Wednesday, would show U.S. crude stocks rose by 4 million barrels to a record last week.
“We expect another strong increase in U.S. crude inventories to be reported,” Fritsch said.
It disclosed that huge increases in domestic oil production have left the U.S. oil market with a fuel glut, exacerbated by a refinery strike that has squeezed demand for crude.
The report noted that the U.S is in the fourth week of its largest refinery strike for 35 years, affecting 12 plants accounting for a fifth of national production capacity. “Talks to end the strike are not expected to resume this week,” it affirmed.
Analysts at Singapore brokerage, Phillip Futures was quoted as saying in a note to clients that “Spreads for crude oil are becoming severely altered by the refinery strikes,”.
“The strike had reduced demand for U.S. crude and helped widen its discount below Brent, the North Sea benchmark,” the analysts at Singapore Brokerage added.
The report says that a report in the Financial Times on Monday quoted Nigeria’s oil minister as saying the country would call an OPEC extraordinary meeting if prices dropped further, offering some support to oil prices.
However, delegates to the Organisation of the Petroleum Exporting Countries said on Tuesday that the producer group had no plans to meet before June, Reuters said.
