* Libya output could be hit by delay in return of expat oil
workers
* Sept/Oct export delays of N.Sea Forties most significant
since May
(Updates prices)
By Luke Pachymuthu
SINGAPORE, Sept 21 (Reuters) – Brent crude rose towards $111
on Friday, extending its gains from a 1-1/2 month low hit in the
previous session, as Libya’s precarious security situation and
lower North Sea production stoked supply fears.
OPEC member and Africa’s third biggest producer Libya
swiftly ramped up oil output after last year’s revolution, but
an assault last week on the U.S. consulate heightened fears
about the new government’s ability to impose its authority, and
this is likely to delay the already-slow return of expatriate
oil workers to the country.
“We saw oil prices spike up around 30-32 percent last year
when Libya was out of the market,” said Natalie Rampono, a
commodity strategist at ANZ.
“This is something to focus on, especially if the security
situation deteriorates,” she added.
Brent rose 47 cents to $110.50 a barrel at 0610 GMT,
after hitting a high of $110.75 earlier in the session. Brent
hit a low of around $107 per barrel on Thursday, its weakest
since Aug. 3.
U.S crude was up 71 cents at $93.13 a barrel. The
October contract expired on Thursday at $91.87 a barrel.
Brent futures are down 5.3 percent so far this week, heading
for their steepest drop since late June, after key exporter
Saudi Arabia pledged to keep prices low, the U.S. mulled release
of strategic reserves and the still weak global economy kept
demand subdued.
U.S. crude is also down about 6 percent for the week, poised
for its biggest weekly drop in about four months.
Adding to the worries about supply disruptions, two more
cargoes of North Sea Forties crude loading in October were
delayed because of lower production.
Export delays in September and October have been the most
significant since May’s loading programme, when 11 Forties
cargoes out of 19 originally planned were deferred, according to
Reuters records based on information from trade sources.
The North Sea Forties crude is the most important of the
four grades that form the Brent crude basket, and disruptions in
its supply exert more influence on the benchmark’s prices.
The 200,000-bpd Buzzard field, the largest connected to the
Forties pipeline, began a shutdown around Sept. 5 that is
expected to take 28 days. Traders said it was now expected to
restart three to five days later than originally planned.
WEAK OUTLOOK
Unless there is an uptick in demand, analysts say the
medium-term outlook for crude remains weak, as supplies are
plentiful while the global economy struggles.
On Thursday, manufacturing reports from the euro zone, China
and the United States showed factory activity remained
lacklustre, further evidence of sluggish global growth.
“As the much anticipated monetary stimulus programs are now
more or less in place, the focus is shifting back towards
economic data and key political milestones for the euro zone,”
J.P. Morgan analysts said in a report.
“U.S. data has been mixed … the most recent Chinese trade
and survey data also offers few signs of a turnaround. Next week
the euro zone will likely return to focus, with Greece, Spain
and France unveiling fiscal plans and budgets,” they added.
(Editing by Himani Sarkar)
(luke.pachymuthu@thomsonreuters.com; +65 6870 3573; Reuters
Messaging:;
luke.pachymuthu.reuters.com@reuters.net
)
