Oil Hits Three-Week High on Supply Risks in Venezuela and Libya

Oil Stable as Rosneft Sanctions Offset Virus-Led Demand Fears

Jacqueline Davalos

20 Feb 2020, 05:08 AM IST

Oil Hits Three-Week High on Supply Risks in Venezuela and Libya

A worker pours extracted crude oil into a bucket in the village (Photographer: Dimas Ardian/Bloomberg)

(Bloomberg) -- Oil climbed to the highest level this month as investors weighed supply disruptions in Venezuela and Libya.

Futures advanced 2.4% in New York on Wednesday. Venezuela’s ability to export crude is in jeopardy after the U.S. sanctioned a unit of Rosneft PJSC, the country’s main oil shipper. Meanwhile, Libya’s cease-fire talks were suspended after the capital’s port was shelled by forces loyal to military commander Khalifa Haftar, who has forced a blockade of the country’s crude exports.

“It’s a big turnaround,” said Mike Hiley, head of OTC energy trading with LPS Partners. “There’s no doubt the market is getting a lift from Libya and sanctions.”

Amid the geopolitical tensions, prices shrugged off an industry report showing a build in U.S. crude stockpiles last week. The American Petroleum Institute reported that inventories rose 4.16 million barrels, according to people familiar with the data. Distillate supplies fell 2.63 million barrels while gasoline stockpiles declined by 2.67 million barrels, API said.

The U.S. Energy Information Administration will publish its weekly petroleum report on Thursday, a day after its usual release due to the President’s Day holiday on Monday. The crude stockpile gain would be the fourth consecutive build, the longest streak since November, if government data confirms it.

West Texas Intermediate for March delivery traded at $53.56 a barrel at 4:38 p.m. after ending the session at $53.29 on the New York Mercantile Exchange.

Brent for April settlement climbed $1.37 to settle at $59.12 a barrel on the ICE Futures Europe exchange, putting its premium over WTI at $5.63. The structure of the futures market is also showing signs of tightening. Brent’s prompt spread rose 16 cents to its strongest level this month, signaling concerns of oversupply may be easing.

The Organization of Petroleum Exporting Countries sent invitations for a meeting between the cartel and its allies on March 5 and 6, signaling that plans for an emergency gathering to address the coronavirus have faded away.

Other oil-market news
Gasoline futures rose 3% to settle at $1.6633 a gallon. Exxon Mobil’s Baton Rouge, Louisiana, refinery may have to keep its crude units idled as long as three weeks to repair gas piping damaged in a Feb. 11 fire, a person familiar with operations said. Saudi Arabia gave the clearest signal yet of its concerns about the impact of the coronavirus on oil markets, comparing the situation to a blaze that needs the fire brigade. If Hollywood were to cast the character of an oil trader, he would look just like Didier Casimiro, the head of Rosneft Trading SA, sanctioned on Tuesday by the U.S. government for his role shipping Venezuelan crude. Reliance Industries Ltd.’s talks to sell a minority stake in its oil-to-chemical division to Saudi Aramco have been gathering pace in recent weeks, according to people familiar with the matter.

Other oil-market news

Gasoline futures rose 3% to settle at $1.6633 a gallon.
Exxon Mobil’s Baton Rouge, Louisiana, refinery may have to keep its crude units idled as long as three weeks to repair gas piping damaged in a Feb. 11 fire, a person familiar with operations said.
Saudi Arabia gave the clearest signal yet of its concerns about the impact of the coronavirus on oil markets, comparing the situation to a blaze that needs the fire brigade.
If Hollywood were to cast the character of an oil trader, he would look just like Didier Casimiro, the head of Rosneft Trading SA, sanctioned on Tuesday by the U.S. government for his role shipping Venezuelan crude.
Reliance Industries Ltd.’s talks to sell a minority stake in its oil-to-chemical division to Saudi Aramco have been gathering pace in recent weeks, according to people familiar with the matter.

To contact the reporter on this story: Jackie Davalos in New York at jdavalos10@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Catherine Traywick, Pratish Narayanan