Brent extended its first weekly gain this month amid speculation escalating violence in Libya will further disrupt supplies from the holder of Africa’s biggest oil reserves. West Texas Intermediate was steady inNew York.
Futures in London advanced 1.7 percent last week. Libya accused a retired army general in the eastern city of Benghazi of planning a coup while the nation’s General Assembly was said to be suspended following clashes in Tripoli. Government forces in Ukraine fought insurgents as separatists prepared for an election later this year after declaring independence.
Libya’s crude production “is already impaired and certainly not positive, which should be supportive of higher prices,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone today. “Adding the potential for escalation in Ukraine, it’s quite clear the risks that oil is on the upside this week.”
Brent for July settlement was at $109.85 a barrel on the London-based ICE Europe Futures exchange, up 10 cents, at 10:47 a.m. Seoul time. The volume of all futures traded was about 3 percent below the 100-day average. Prices rose $1.86 to $109.75 last week, snapping a two-week losing streak.
WTI for June delivery, which expires tomorrow, was 2 cents higher at $102.04 a barrel in electronic trading on the New York Mercantile Exchange. The more-active July contract climbed 1 cent to $101.59. The U.S. benchmark crude was at a discount of $8.26 to Brent.
Libyan Output
Libya, a member of the Organization of Petroleum Exporting Countries, has struggled to restore security three years after the revolt that toppled former leader Muammar Qaddafi. Oil production declined to 215,000 barrels a day in April, about 13 percent of capacity, data compiled by Bloomberg show.
The North African country’s General Assembly has been replaced by a 60-member group that will work with an election commission, Colonel Mukhtar Fernana, who is loyal to dissident army general Khalifa Haftar, said in a speech aired on Al-Jazeera television.
Libya’s government, parliament and chief of staff issued a joint statement on May 17 “calling on the population of Benghazi to remain united and defeat the coup plotters,” according to LANA, the officialnews agency.
Ukraine Crisis
In Ukraine’s Donbass regions of Donetsk and Luhansk, masked men set fire to a candidate’s regional campaign office ahead of a May 25 presidential ballot. Pro-Russian separatists, who control buildings and radio and television towers in about 15 cities, said they may hold a vote on Sept. 14 to elect officials for their self-proclaimed “Donetsk People’s Republic.”
The North Atlantic Treaty Organization has expressed concern that the referendums may be a precursor to a land grab similar to Russia’s annexation of Crimea from Ukraine in March. Russia is the world’s largest energy exporter.
Source: Bloomberg
