Oil Price Fundamental Daily Forecast – Traders Giving Back Earlier Force Majeure GainsLibya’s state-owned NOC has declared force majeure on crude exports from the eastern Marsa el-Hariga terminal.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on Tuesday, but well off its highs. The markets jumped earlier in the session due to a disruption to Libyan exports and expectations of a drop in U.S. crude inventories. However, worries over rising coronavirus cases in Asia may have limited gains.
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Libya Declares Force Majeure
Libya’s state-owned NOC has declared force majeure on crude exports from the eastern Marsa el-Hariga terminal, after its subsidiary Agoco reduced output on the back of a budget dispute.
NOC said that Agoco was forced to lower production because of a lack of funding from the Central Bank of Libya prevented the company from fulfilling its financial and technical obligations. The state firm said that the Agoco disruption could lead to a 280,000 barrels per day loss of the company’s combined output, threatening to bring Libyan production below 1 million barrels per day for the first time in months. The north African country’s average monthly output has stayed above this mark since November, according to Argus estimates.
Libya’s legislative body, the House of Representatives, convenes today to review a long-stalled draft of the 2021 national budget.
American Petroleum Institute Weekly Inventories Report
The API is scheduled to release its weekly inventories report at 20:30 GMT. U.S. crude stockpiles are expected to drop by 2.9 million barrels. On paper, this news sounds supportive, but traders will be paying close attention to the gasoline and distillate figures since they reflect the strength of the economy.
Gasoline inventories could rise as companies prepare for the summer driving season as the economy continues to open up. Distillates could fall as air travel rises.
After an initial surge, prices are falling back toward unchanged or lower for the session. This could be an indication that traders have dampened concerns over the Libyan situation. It could also mean that traders are worried about the pace of the demand recovery due to the rise in worldwide coronavirus cases.