Oil Falls Again on OPEC Output Increases
01/10/17 11:34 AM EST
By Timothy Puko
Oil prices flipped to losses Tuesday with investors still questioning the impact of an OPEC deal to cut production that had originally sent prices to 18-month highs.
The Wall Street Journal reported early Tuesday that Libya, exempted from production cuts, had more than tripled its crude output in the past six months. Data in recent days also showed growing exports from Iran and Iraq, which has made investors nervous that a plan from the Organization of the Petroleum Exporting Countries may not be enough to end two years of oversupply.
Light, sweet crude for February delivery recently lost 72 cents, or 1.4%, to $51.24 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 85 cents, or 1.6%, to $54.09 a barrel on ICE Futures Europe.
OPEC members and several other big global exporters agreed last month to cut output by nearly 1.8 million barrels a day in total, more than 1% of global supply. However, some countries, including Libya and Iran, were given exemptions because of civil conflicts or economic considerations. Iraq was allowed to cut by just a relatively small amount and then government officials laid plans to increase exports anyway.
The Journal reported Tuesday that Libyan militias that once kept oil fields and ports closed have instead struck deals that allowed the National Oil Co., or NOC, to raise production to a three-year high of 708,000 barrels a day this week, an NOC spokesman said. It had been just 200,000 barrels a day last year, but now NOC believes it could hit 900,000 barrels a day in 2017.
Iran has likely sold off oil it had been holding in storage. ClipperData had said Monday that Iranian floating storage was down to 17 million barrels from 32.5 million, according to ClipperData. The firm also reported Iraqi exports going through the southern oil ports of Basra are at the highest in four years of tracking, just shy of 3.5 million barrels a day in January.
"It's just incredible how much" production is still coming," said Tariq Zahir, who oversees $8 million as managing member of Tyche Capital Advisors LLC. "All of these cuts could be negated just by Libyan production."
Benoit Faucon and Hassan Morajea contributed to this article
Write to Timothy Puko at tim.puko@wsj.com
By Timothy Puko
Oil prices flipped to losses Tuesday with investors still questioning the impact of an OPEC deal to cut production that had originally sent prices to 18-month highs.
The Wall Street Journal reported early Tuesday that Libya, exempted from production cuts, had more than tripled its crude output in the past six months. Data in recent days also showed growing exports from Iran and Iraq, which has made investors nervous that a plan from the Organization of the Petroleum Exporting Countries may not be enough to end two years of oversupply.
Light, sweet crude for February delivery recently lost 72 cents, or 1.4%, to $51.24 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 85 cents, or 1.6%, to $54.09 a barrel on ICE Futures Europe.
OPEC members and several other big global exporters agreed last month to cut output by nearly 1.8 million barrels a day in total, more than 1% of global supply. However, some countries, including Libya and Iran, were given exemptions because of civil conflicts or economic considerations. Iraq was allowed to cut by just a relatively small amount and then government officials laid plans to increase exports anyway.
The Journal reported Tuesday that Libyan militias that once kept oil fields and ports closed have instead struck deals that allowed the National Oil Co., or NOC, to raise production to a three-year high of 708,000 barrels a day this week, an NOC spokesman said. It had been just 200,000 barrels a day last year, but now NOC believes it could hit 900,000 barrels a day in 2017.
Iran has likely sold off oil it had been holding in storage. ClipperData had said Monday that Iranian floating storage was down to 17 million barrels from 32.5 million, according to ClipperData. The firm also reported Iraqi exports going through the southern oil ports of Basra are at the highest in four years of tracking, just shy of 3.5 million barrels a day in January.
"It's just incredible how much" production is still coming," said Tariq Zahir, who oversees $8 million as managing member of Tyche Capital Advisors LLC. "All of these cuts could be negated just by Libyan production."
Benoit Faucon and Hassan Morajea contributed to this article
Write to Timothy Puko at tim.puko@wsj.com
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