WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange moved higher in early trading Tuesday supported by gains in equity markets and an interruption to oil exports from Libya following an organized military attack at the North African nation's giant El Sharara oil field.
In midmorning trading, Nymex West Texas Intermediate rose $1.20 to $52.21 barrel (bbl) after having fallen 3.0% on Monday, while ICE Brent recovered $0.90 to $60.83 bbl after plunging 2.8% during the previous trading session. Nymex January ULSD and RBOB futures were each up 1.65 cents near $1.8600 and $1.4350 gallon, respectively. ULSD futures lost 4.21 cents gallon and the RBOB contract 6.69 cents on Monday.
According to reports, oil production from Libya's 315,000 bpd El Sharara and 73,000 barrels per day (bpd) El Feel oilfields was completely shut-in following an organized attack by the Fezzan Anger Movement. The spokesperson for the movement confirmed that oil production from the fields is halted and the crude already extracted is being redirected from the export terminals into the storage tanks.
Libyan's oil sector continues to face security problems since the start of the civil war in the North African nation, as rival militias fight for power and control of oil fields. Libya's oil output has steadily declined from 1.6 million bpd in 2011 to 1.05 million bpd in 2018, down almost 35%.
News of the Libyan supply outage came after the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producing countries led by Russia agreed to cut 1.2 million bpd in crude production for six months beginning Jan. 1, with Libya, Nigeria, Iran and Venezuela exempt from the agreement. Alexander Novak, Russian Energy Minister, said Tuesday morning that his country will cut output by 50,000 to 60,000 bpd in January, as part of gradual reduction of 230,000 bpd committed under the agreement.
Some market analysts question whether the deal will be effective to lift oil prices, as surging production from the United States and a slowing economic growth outlook can offset the cut from OPEC+ agreement.
Oil futures were also supported by a rebound in the stock market Tuesday morning on news of a fresh round of trade talks between the United States and China. The Dow Jones Industrial Average up 300 points at one point, with automakers and technology stocks driving a large portion of stock market advance.
According to reports, China is considering lowering tariffs on U.S. automobiles imported into the country, which would meet a demand by U.S. President Donald Trump. On Dec. 1, Trump and Chinese President Xi Jinping reached a 90-day truce in their trade dispute in an effort to discuss U.S. demands that China change its trade policy or face increasing tariffs on its imports to the United States.
British Prime Minister Theresa May on Monday postponed a vote in the British Parliament until Jan. 21 over her agreement with the European Union regarding Britain's exit from the EU as it faced certain defeat. The Bank of England said Britain's economy would suffer if the country fails to reach a trade agreement with the EU. While the outcome of a hard Brexit in March have increased substantially, the delay in the vote provides a temporary extension to negotiate.
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