Libya Increases Oil Production; Market Fluctuates

The speculation that Libyan oil production would increase sent the crude oil market into a mild fluctuation. But in a press conference Aug. 5 in Tripol...

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|Aug 6|magazine5 min read

The speculation that Libyan oil production would increase sent the crude oil market into a mild fluctuation. But in a press conference Aug. 5 in Tripoli, Libyan Oil Minister Abdulbari Al-Arusi stated that the country has increased oil production and will keep increasing production further.

According to Al-Arusi, the oil fields are producing 700,000 barrels per day, which is still below normal, and he expects them to be producing 800,000 by the end of the week. Also, an oil port in the North African country reopened after protesters shut it down last week.

The crude oil market dropped $1 after hearing that Libya would increase oil production. Gasoline fell to the lowest level in almost four weeks on speculation that refinery restarts will increase supplies and as crude weakened.

According to Bloomberg.com, gasoline for September delivery declined 5.08 cents, or 1.7 percent, to $2.9439 a gallon at 9:48 a.m. on the New York Mercantile Exchange after touching $2.9403, the lowest intraday level since July 9. Trading volume was 12 percent above the 100-day average.

Pump prices, averaged nationwide, slipped 0.3 cent to $3.614 a gallon, Heathrow, Florida-based AAA said on its website. Prices are 0.4 cent higher than a year ago.

Ultra-low-sulfur diesel for September delivery sank 4.41 cents, or 1.4 percent, to $3.0273 a gallon on trading volume that was 12 percent below the 100-day average.

The WSJ reports that the International Energy Agency cautioned that about 500,000 barrels a day of supply would be at risk of disruption in 2014 because of geopolitical and technical risks--roughly the equivalent of the expected increase in U.S. production that year.

According to the International Energy Agency, in addition to the disruptions in Libya, oil theft in Nigeria, and pipeline sabotage in Iraq have dented production in these countries. There have also been fears South Sudan may scale down oil flow through Sudan again amid a pricing dispute.