Libya shutdown helps to boost crude oil price

Crude headed for its longest run of gains this year as Libya’s biggest oil field suffered another outage while Russia signalled it is weighing an extension of Opec-led production cuts.

Libya shutdown helps to boost crude oil price

Futures gained for a fifth day in New York, adding to last week’s 3.2% gain following a US military strike on Syria. Libya’s Sharara field halted production just one week after reopening, with the National Oil Corporation declaring force majeure on exports, according to a copy of its decree obtained by Bloomberg.

In Russia, Energy Minister Alexander Novak said last week his ministry had been in talks with oil companies regarding the need to prolong the six-month deal with Opec.

Support from some members of the Organisation of Petroleum Exporting Countries to extend the curbs has sparked a rally above $50 a barrel. The cuts have stabilised the market and Russia will continue to watch inventory levels, but it’s too early to decide whether the pact should be prolonged, Novak said.

Libya is exempt from the agreement. It said Sharara had been pumping 200,000 barrels a day before the latest disruption, according to the National Oil Corporation. A week earlier, exports were interrupted by a pipeline halt.

“The Libyans are constantly shutting and reopening their fields because of political and technical issues,” Michael Lynch, president of the Strategic Energy and Economic Research in Massachusetts said.

“The talk of an extension, strength of the US economy and ongoing minor supply problems like Libya are leading people to think the market will probably be getting tighter.”

Brent for June settlement climbed 58c, or 1.1%, to $55.82 a barrel on the London-based ICE Futures Europe exchange after advancing 35c late last week.

West Texas Intermediate for May delivery rose 58c, or 1.1% to $52.82 a barrel on the New York Mercantile Exchange. The contract gained 1.1% to $52.24 late last week, the highest close in a month.

Russia, which pledged to trim output by as much as 300,000 barrels a day by the end of this month, will make a decision on prolonging the curbs after “monitoring results in April and May,” according to Deputy Prime Minister Arkady Dvorkovich.

Cuts so far haven’t delivered the expected price boost, he said at an Energy Ministry conference in Moscow on Friday. While the nation isn’t a member of Opec, Russia and 10 other countries joined the group in cutting output from January.

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