WASHINGTON (DTN) -- After choppy trade for most of Tuesday's session, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled lower. The February West Texas Intermediate contract expired little changed amid the sustained shutdown of Libya's 1.2 million barrels per day (bpd) of crude production, while the oil complex was under pressure amid growing concerns an outbreak of a deadly respiratory virus in China could weaken global demand.
NYMEX February WTI futures expired lower $0.20 at $58.34 barrel (bbl), with next-month delivery March futures narrowing premium to $0.04 for a $58.38 settlement. ICE March Brent futures dropped a steeper $0.61 to a one-week low $64.59 bbl settlement. NYMEX February RBOB futures moved down 0.41 cents to $1.6365 gallon and the front-month ULSD contract fell 3 cents at $1.8292 gallon, a fresh five-month spot low.
Wire services reported Libya's crude output has fallen to just 400,000 bpd -- one-third of its daily level prior to General Khalifa Haftar's forces shutting a key pipeline carrying oil from producing fields to export terminals. As of Tuesday afternoon, almost all of Libya's crude export capacity was declared under force majeure -- a waiver on contractual obligations due to unforeseen circumstances.
The continuous shutdown comes after Haftar and the internationally recognized government in Tripoli failed to agree on a ceasefire during a summit in Berlin last week, preceded by multiple attempts at peace talks among warring factions in the nearly decade-long civil war.
Libya's National Oil Company said in a statement that if crude exports are halted for an extended period of time, the country's production would slow to just 72,000 bpd from 1.2 million bpd prior to the flare-up in civil unrest.
In neighboring Iraq, anti-government protests simultaneously shut down operations at the Al Ahdab oil field, which pumps some 70,000 bpd and threatened to cut another 50,000 bpd from Badra field in the southern provinces.
Potential for sustained production outages has gained momentum in late afternoon trading, paring some of oil futures earlier declines.
Countering those concerns, China's deadly coronavirus has spread beyond national borders on Tuesday, with the first case of virus reported along the U.S. West Coast.
Several major U.S. airports expanded their security checks for arrivals from China, potentially impacting holiday travels ahead of Chinese Lunar New Year celebration, which will also have a negative impact on fuel consumption in the coming weeks.
There are now more than 200 cases, mostly in central China, though the respiratory illness has also been detected in Beijing, Shanghai and Shenzhen. The situation remains fluid.
Liubov Georges can be reached at firstname.lastname@example.org
Copyright 2020 DTN/The Progressive Farmer. All rights reserved.