Libya’s Crude Oil Production Weighs on the Crude Oil Market

Crude oil prices  

WTI (West Texas Intermediate) crude oil (USO) (UCO) (RYE) futures contracts for May delivery fell 0.7% and closed at $50.2 per barrel on April 3, 2017. Crude oil and natural gas are major parts of the energy sector. The energy sector contributed to ~6.6% of the S&P 500 (SPY) (SPX-INDEX) as of March 31, 2017. Broader markets like the S&P 500 and Dow Jones (DJIA-INDEX) fell 0.1%, respectively, on April 3, 2017.

US crude oil prices fell for the first time in the last four days due to the following:

Libya’s Crude Oil Production Weighs on the Crude Oil Market

However, US crude oil prices are near a one-month high. To learn more, read Crude Oil Prices: Biggest Weekly Gain in 4 Months. 

Libya’s crude oil production 

A Reuters survey estimates that Libya’s crude oil production fell by ~70,000 bpd (barrels per day) to 600,000 bpd in March 2017—compared to the previous month. Libya’s crude oil production hit 690,000 bpd in January 2017—the highest level in the last three years.

Militant attacks on the country’s oil infrastructure caused the fall in Libya’s crude oil production in March 2017. On April 2, 2017, Libya’s largest oil field at Sharara resumed production. It produced 120,000 bpd on April 3, 3017. It was producing ~220,000 bpd before the shutdown on March 27, 2017, according to Reuters sources.

Bloomberg sources stated that Libya’s crude oil production is expected to rise to ~660, 000 bpd in the coming months. It produced 500,000 bpd in the last week of March 2017. Libya’s National Oil Corporation reported that the force majeure on the Zawiya export terminal at Sharara was lifted on April 2, 2017. It also estimates that the country could produce 1.25 MMbpd of crude oil by the end of August 2017 if all of the blockades on its ports are cleared. However, Libya is prone to political turmoil and security concerns.

The rise in crude oil production from Libya could pressure crude oil (PXI) (IEZ) (XES) (SCO) prices. Read this series to learn more about bearish drivers. Moves in crude oil prices impact oil producers such as SM Energy (SM), Chevron (CVX), ExxonMobil (XOM), and Goodrich Petroleum (GDP).

What’s in this series?  

In this series, we’ll focus on the American Petroleum Institute’s crude oil inventories, OPEC’s crude oil production, Russia’s crude oil production, monthly US crude oil production, and Iran’s crude oil production.

In the next part of this series, let’s start with crude oil prices during early morning trade on April 4, 2017.