Oil prices were mixed on Monday, with U.S. crude lower on news about the timeline for the end of a major Canadian production outage, while global benchmark Brent gained on looming sanctions on Iran and falling production in Libya.
U.S. light crude futures were down 33 cents to $73.46 by 12:17 p.m. EDT (1617 GMT). Brent was up 74 cents at $77.85. An updated timeline on the restart of the Syncrude oil sands facility added a jolt of volatility into U.S. crude trading, said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.
Brent, meanwhile, was well supported. The United States says it wants to reduce oil exports from Iran, the world’s fifth-biggest producer, to zero by November, which would oblige other big producers to pump more.
“It’s telling that the multinationals are taking this sanctions business very seriously and are preparing to pull out of Iran. That’s really crystallizing the loss of production we’re facing,” said Kilduff.
In Canada, majority stakeholder Suncor (SU.TO) said on Monday that some Syncrude production would come back online in July, sooner than expected. It will not resume full operations until September, however, which is later than expected.
The 360,000-barrel-per-day (bpd) facility in northern Alberta has been shut since late June, cutting oil flows into Cushing, Oklahoma, the delivery point for U.S. crude futures. Stocks in Cushing rose slightly between Tuesday and Friday, according to market intelligence firm Genscape, according to analysts who saw the data.The market has grown concerned that if the Saudis offset the losses from Iran, it will leave oil markets at risk of further production declines in countries like Venezuela and Libya.
“If the Saudis and others replace the losses from Iran, there will be basically no spare capacity left,” Societe Generale oil analyst Michael Wittner said. Saudi Arabia, fellow members of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia agreed last month to increase output to dampen price gains and offset global production losses in countries including Libya.
Libyan oil output has halved in five months, falling to 527,000 barrels per day (bpd) from a high of 1.28 million bpd in February, the head of the National Oil Corporation, Mustafa Sanalla, said on Monday. “Tomorrow it will be less and the day after tomorrow less again. And we are going lower,” Sanalla said. Reuters
