By Conor Molumby and Rupert Rowling
Libya’s crude shipments jumped to a new three-year high last month, dealing a fresh blow to Opec and allied oil-producing nations as they battle to restrict a global supply surplus that’s depressing prices for the commodity.
The North African nation shipped about 865,000 barrels a day of crude in July, tanker tracking data compiled by Bloomberg show. That was a gain of 11 percent from June, which was already the highest since at least July 2014.
Oil, meanwhile, extended its decline below $49 a barrel as industry data showed US crude stockpiles expanded, adding to a glut.
Futures slid as much as 1.1 percent in New York after losing 2 percent Tuesday, the first drop in seven sessions. Inventories rose by 1.78 million barrels last week, the American Petroleum Institute was said to report. Energy Information Administration data Wednesday is forecast to show stockpiles decreased for a fifth week. Opec output climbed in July as Libya boosted supply, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.
West Texas Intermediate for September delivery dropped as much as 52 cents to $48.64 a barrel on the New York Mercantile Exchange, and was at $48.75 at 7:45 a.m. in London. Total volume traded was at about the 100-day average. The contract lost $1.01 to $49.16 on Tuesday.
Brent for October settlement was 41 cents lower at $51.37 a barrel on the London-based ICE Futures Europe exchange. Prices fell 94 cents, or 1.8 percent, to $51.78 on Tuesday. The global benchmark crude traded at a premium of $2.50 to October-delivery WTI.
The pace at which Libya can revive crude sales is critical for the oil market because, along with Nigeria, the nation wasn’t bound by Organization of Petroleum Exporting Countries supply restrictions that helped limit supply this year. Domestic conflicts mean the two nations can pump at will while other producer states are depriving themselves of export revenues. Nigeria is also boosting output as a militant campaign is quelled.
Libya’s revival “hurts Opec’s efforts to re-balance the oil market,” said Carsten Fritsch, an analyst at Commerzbank AG. It comes at a time when other countries that agreed to curb production are starting to comply less strictly with the accord, he said.
The total output from Opec members in July rose 210,000 barrels a day from June to reach 32.87 million barrels a day, according to data compiled by Bloomberg. Libya led the gains. An expected crude-price recovery has failed to materialize since January, the start point for when Opec, along with non-member nations including Russia, agreed to restrict collective output by about 1.8 million barrels a day.
It may be a challenge for Libya to maintain its current rate of exports, according to Torbjorn Kjus, chief oil analyst at DNB Bank ASA.
“It would be a surprise if they could keep production stable,” he said, adding that there are still too many groups and people battling for a share of the country’s oil sales.