Libya: How Long Will It Support Crude Oil Prices?

Crude oil prices 

WTI (West Texas Intermediate) crude oil (BNO) (XES) (IEZ) futures contracts for May delivery rose 1.3% and settled at $48.37 per barrel on March 28, 2017. The US stock market (SPY) (SPX-INDEX) also rose 0.7% on March 28, 2017. Oil and gas are major parts of the energy sector. The energy sector contributed to ~6.5% of the S&P 500 as of March 24, 2017.

Libya: How Long Will It Support Crude Oil Prices?

Crude oil supply disruption in Libya

On March 28, 2017, crude oil futures rose from almost a four-month low due to supply disruption in Libya. Militants blocked crude oil production activity at western Libyan oilfields—Sharara and Wafa. Libya’s National Oil Corporation reported that production fell by 252,000 barrels per day (bpd). It’s about a 30% drop in production from current levels. It isn’t certain when production activity will start again. It could support oil prices in the short term. 

Major oil producers’ deal 

Crude oil (XLE) (XOP) (USO) prices hit a 20-month high on February 23, 2017, due to major producers’ production cut deal. The possible extension of the deal beyond June 2017 also supported oil prices on March 28, 2017.

Volatility in crude oil prices impacts oil and gas exploration and production companies’ earnings such as Chevron (CVX), Noble Energy (NBL), Warren Resources (WRES), and QEP Resources (QEP).

Post-settlement trade 

US crude oil prices rose in post-settlement trade on March 28, 2017, despite the API’s (American Petroleum Institute) bearish crude oil inventory report.

Market focuses on US crude oil inventories 

The EIA will release its weekly crude oil inventory report on March 29, 2017, at 10:30 AM EST. We’ll look at the API’s estimates for US crude oil and gasoline inventories in Part 3 and Part 4 of this series.

In this series, we’ll also discuss US gasoline demand. Let’s start with US crude oil prices in early morning trade on March 29, 2017.