Oil Prices Rise on Libya Unrest

By Nicole Friedman, Benoit Faucon and Summer Said 

Oil prices edged higher Monday after fighting engulfed Libya's key Eastern crude-oil ports.

Libyan officials said last week that they planned to ship oil from a long-closed port, but that shipment was delayed amid violence over the weekend.

The unrest has heightened investor uncertainty about whether Libyan oil production, which stands well below the country's full capacity, can increase. Libyan output now stands at about 300,000 barrels a day, but Libyan officials say they could quickly ramp up if oil ports remained open and secure for an extended period.

If Libyan production rises, that could weigh on oil prices as a global oversupply of crude continues to persist.

Following the weekend's fighting, "the expectation of a rapid normalization of Libyan oil exports is likely to prove illusory," said Commerzbank in a note.

U.S. crude for October delivery recently rose 60 cents, or 1.4%, to $43.63 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 56 cents, or 1.2%, to $46.33 a barrel on ICE Futures Europe.

Gasoline futures fell Monday as concerns ebbed that a partial pipeline outage would cause fuel shortages on the U.S. East Coast.

The Colonial Pipeline, which ships 2.6 million barrels a day of fuel from the Gulf Coast to the East Coast, has partly closed its main gasoline-shipping route for more than week following a leak in Alabama.

The closure has restricted gasoline deliveries to the East Coast, particularly in the Southeast, raising prices at the pump and forcing gasoline suppliers to use ships and other delivery methods.

Colonial Pipeline Co., which operates the pipeline, started building a temporary pipeline segment around the site of the leak over the weekend and expects to restart the shipping route this week, according to news releases.

Gasoline futures, which jumped 7.4% last week, recently fell 0.8% to $1.4497 a gallon.

In six southeastern states, "gasoline deliveries have all but halted and inventories at local gasoline racks have quickly been depleting as panicked motorists fill their tanks, leading to gas price spikes, supply outages and headaches," said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, in a note.

Investors are also watching mixed coming from the Organization of the Petroleum Exporting Countries and other oil-producing nations ahead of an informal meeting next week.

Members of OPEC, including Saudi Arabia, have voiced support in recent weeks for a coordinated action to support the price of oil. But OPEC Secretary General Mohammed Barkindo late Saturday said no decision would be made at informal talks among the cartel's members in Algeria next week.

"It is an informal meeting, it is not a decision-making meeting," he said, dampening hopes that any agreement could be reached to cap production in order to boost prices.

However, Venezuelan President Nicolás Maduro said members of OPEC and non-cartel members are nearing a deal on the matter.

"We're close to a deal between OPEC producer countries and non-OPEC," he told a news conference after meeting with Iranian President Hassan Rouhani.

Diesel futures recently rose 1% to $1.4186 a gallon.

--

Hassan Morajea

contributed to this article.

Write to Nicole Friedman at [e-mail], Benoit Faucon at [e-mail] and Summer Said at [e-mail]

(END) Dow Jones Newswires

September 19, 2016 10:57 ET (14:57 GMT)

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