Oil extended its gains above $52 a barrel as a planned production boost from Libya stalled amid continuing tension in the OPEC member exempt from agreed output cuts.
Futures climbed as much as 1.2 percent in New York after rising 2 percent on Friday. Libyan oil-facility guards have backtracked on an agreement to allow supply to flow from the El Feel and Sharara fields, two of the country’s biggest, according to an engineer that operates El Feel. Money managers increased their net-long positions on West Texas Intermediate to the highest since July 2014, U.S. Commodity Futures Trading Commission data showed.
Oil has traded near $50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov. 30 to reduce production for the first time in eight years. Goldman Sachs Group Inc. last week increased its second-quarter crude price forecasts and predicted stockpiles would return to normal levels by the middle of 2017 amid the curbs that include non-OPEC nations from Russia to Mexico.
“Libya is the largest key variable on the supply side in the short term, so the fact there is an element of doubt on field restarts is one thing supporting the market,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The downside for oil is fairly limited at the moment after the OPEC agreement to cut production.”
WTI for January delivery, which expires Tuesday, rose as much as 62 cents to $52.52 a barrel on the New York Mercantile Exchange and was at $52.30 at 2:14 p.m. in Singapore. The contract gained $1 to $51.90 on Friday. Total volume traded was about 6 percent above the 100-day average. The more-active February future gained 40 cents to $53.35 a barrel.
Libya Output
Brent for February settlement climbed as much as 59 cents, or 1.1 percent, to $55.80 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.19 to February WTI.
A group of Libyan guards prevented the flow of oil by pipeline, Khaled Hadloul, an engineer at Mellitah Oil & Gas, which operates El Feel, said by phone. The Repsol SA-operated Sharara field is also yet to restart because both fields feed into the same pipeline network, Hadloul said.
Oil-market news:
Hedge funds increased wagers on rising WTI by 2.5 percent in the week ended Dec. 13, U.S. CFTC data show, while shorts, or bets on lower prices, tumbled 30 percent to the lowest level since May. Russia’s Rosneft PJSC has the opportunity to accelerate its international expansion next year as the political environment becomes more favorable for the state-run producer, according to Wood Mackenzie Ltd.