OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange reversed sharply lower in early trade Wednesday amid media reports that Libya's National Oil Corp had reopened four key export terminals previously shut-in in the eastern portion of the country.
A report from Reuters indicated Tripoli-based NOC had lifted force majeure restrictions at the ports saying that exports from the terminals would "return to normal in the next few hours."
The news from Libya caused the price of international oil benchmark Brent crude to turn lower overnight with prices falling as much as $2.10 per barrel (bbl) at one point to $76.76 bbl. Prices have since trimmed the decline, though still remain down more than $1.50 bbl.
Libya's ongoing violent civil war has resulted in the destruction of oil storage infrastructure, causing June production to plummet by 254,000 barrels per day (bpd) to 708,000 bpd, according to data released Wednesday in the Organization of the Petroleum Exporting Country's Monthly Oil Market Report.
The lost Libyan supply compounded slashed production from OPEC member Venezuela, where years of government mismanagement and recent asset seizures of PDVSA export infrastructure by Conoco Phillips in the Caribbean has slashed exports. OPEC's MOMR reported production from Venezuela dropped 47,500 bpd to 1.34 million bpd in June, citing secondary sources, while Venezuela reported output only 2,000 bpd lower at 1.531 million bpd.
In its monthly report, OPEC revised higher expected non-OPEC supply for 2018 by 180,000 bpd to 59.54 million bpd, while maintaining its outlook for 2018 world oil consumption of 98.85 million bpd. The revision was driven by a higher supply outlook for Russia in the second half of 2018 and an upward adjustment in U.S. oil supply.
OPEC reported that based on data from Russia's Energy Ministry, Russia's liquid supply increased 90,000 bpd in June to a 2018 high of 11.24 million bpd, with Russia's Minister of Energy indicating Russian production would be able to increase by 200,000 bpd by the end of the year.
Consultants with Energy Security Analysis, Inc. said Russian oil producers are capable of producing well beyond the 200,000 bpd increase agreed to in June with the OPEC and nine non-OPEC oil producers as they relaxed their supply agreement in the face of a string of global oil supply disruptions.
"Between new projects and mature fields where producers have made cuts to cap production, producers have more than 500,000 b/d of spare capacity," said ESAI Energy LLC.
Late Tuesday ahead of the Energy Information Administration's 10:30 a.m. EDT supply report, the American Petroleum Institute said U.S. crude inventories declined 6.706 million bbl for the week ended July 6, while gasoline inventories dropped 1.59 million bbl and distillate supplies rose 1.952 million bbl. API reported supply at the key Cushing, Oklahoma, delivery location for the West Texas Intermediate crude contract dropped 1.952 million bbl amid a continuing outage at Syncrude's 360,000 bpd upgrader in Alberta.
Despite the bullish API report, WTI crude for August delivery was off more than 80 cents per bbl in early trade to $73.30 bbl.
Near 9:00 a.m. EDT, the NYMEX August WTI futures contract was 77 cents down at $73.34 bbl, while the September contract declined 83 cents to $71.73 bbl. ICE September Brent, was $1.06 bbl lower at $77.26, while the October contract was off $1.47 at $77.15 bbl.
NYMEX August RBOB contracts were 3.0 cents lower at $2.1303 gallon, while September RBOB was 3.08 cents down at $2.1088 gallon, while the August ULSD contract fell 3.10 cent per gallon to $2.1908 gallon.
Brian Whary can be reached at firstname.lastname@example.org
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