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Oil near $75 as Libyan port dispute adds to supply concerns

Brent crude traded near $75 (Dh275.47) a barrel as key Libyan oil ports were handed to a company rivalling the nation’s internationally recognised energy producer.

The global oil benchmark added as much as 0.8 per cent. The chairman of Tripoli-based National Oil Corp said any attempt to buy crude from the rival company is a deviation from United Nations resolutions and Libyan law. In North America, Goldman Sachs Group Inc warned that an oil-sands outage in Canada could lead to a shortage through July and drain stockpiles.

Investor focus is shifting to US crude inventories, after Goldman said a decline at the storage hub in Cushing, Oklahoma, could have a stronger impact on the market than Opec’s recent deal to raise output. US Energy Secretary Rick Perry also said the organisation’s plan to increase production “may be a little short” of what’s required amid supply concerns from Venezuela to Iran.

“There are more and more supply issues popping up while demand is still rising,” said Hans van Cleef, a senior energy economist at ABN Amro Bank NV. The Libya news “builds on the fact that exports in other countries, like Iran, will face problems in the coming months.”

Brent futures for August settlement rose 1 cent to $74.74 a barrel on the London-based ICE Futures Europe exchange at 11.27am local time, having earlier touched $75.32. Brent traded at a $6.87 premium to West Texas Intermediate.

WTI crude for August delivery slipped 22 cents to $67.86 a barrel on the New York Mercantile Exchange. Total volume traded was about 5 per cent below the 100-day average.

WTI and Brent both fell Monday after Saudi Arabia and Russia pledged to keep prices under control by restoring production. Oil chiefs from the top two crude exporters indicated that last week’s 24-nation accord would add as much as 1 million barrels to daily supplies, though Goldman said a large output increase would bring only a slim surplus.

In Canada, a key piece of equipment at Syncrude’s oil-sands complex in Alberta halted operations last week after a transformer blast shut the entire 350,000-barrel-a-day facility. Syncrude is assessing the disruption, the plant controller Suncor Energy Inc said.

In Libya, forces of Commander Khalifa Haftar handed control of oil ports in the east to a state unit rivalling the National Oil Corp based in the west. Civil strife persists in the North African country, which lost about 400,000 barrels of daily production amid recent clashes, and the latest news is likely to increase uncertainty among oil buyers.

Source: Gulf News

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