Oil is having a brutal summer despite unrest in some of the world’s top oil-producing countries.
Abundant supply and sluggish demand continue to weigh on prices.
At $US101.44, London-traded Brent crude is down approximately 6% over the past three months, and 12% since a brief mid-June run-up when investors were first grappling with the implications of terrorist group ISIS’ gains in Iraq.
On Thursday, markets got more bearish news as Libya announced oil exports would resume out of Es Sider, its largest terminal and the last remaining port shut down by unrest, WSJ’s Benoit Faucon reports. Prices fell nearly 1% Thursday morning.
Combined with recently resumed production at its largest oil field, the Sharara in the country’s west, Libyan output has now jumped to 560,000 barrels a day, four times May’s level, Faucon says.
As for Iraq, because most of Iraq’s oil production is concentrated in the country’s south, and ISIS-controlled territory remains clustered in the country’s north, output has yet to be materially affected.
Meanwhile, Western sanctions designed to punish Russian meddling in Ukraine were carefully carved out to avoid tripping up flows to Europe. Summer output remains mostly in-line with previous years’ levels, according to the IEA.
Combined with the uninterrupted American shale boom, the IEA now sees 2014 supply growth of 1.6 mb/d, or 2.9%, compared with the 2.5% increase in 2013.
The other factor weighing on prices is lack of demand, especially in Europe, where economic growth has seemingly ground to a halt. German consumption in Q2 fell 6% YOY, while Italian demand fell more than 3% in July. China also saw its demand growth forecast lowered to 2.9% from a prior 3.3% as its economy continues to slow.
New York-traded West Texas Intermediate has had it even worse, down approximately 10% since June to $US92.
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