Striking security guards reimposed a two-week-old shutdown at Libya’s two biggest crude export terminals on Monday, hours after they had reopened, and more oilfields closed in a wave of protest that is propping up world oil prices.
Seeking to reassure markets Libya’s deputy oil minister said on Tuesday that exports could resume as early as Thursday as workers and local authorities reached an agreement to end the strike.
Brent crude was steady at $108.96 a barrel, early on Tuesday unchanged from its close in the previous session. Brent had fallen to a low of $107.43 a barrel on Monday, but rose back above its 200-day moving average at $108.16, a key technical marker watched by traders.
Reuters market analyst Wang Tao indicates that Brent is now expected to face resistance at $109.09 a barrel. US. Oil was down 13 cents at $105.98 a barrel.
“The volatile geopolitical climate in that region is going to keep prices supported as we go out into the fourth-quarter,” said Carl Larry, president of the Houston-based consultancy Oil Outlooks and Opinions.
“But traders will also be cautious not to overreact to every headline because this uncertainty is the new norm for the region,” said Carl Larry, president of the Houston-based consultancy Oil Outlooks and Opinions.
Upcoming maintenance work at Iraq’s key southern export hub is expected to cut supplies by 500,000 barrels per day in September, lending further support to prices in the medium term.
European refiners are also set to cut processing rates by around 500,000 bpd on poor profit margins.
Investors are likely to use economic data out of the United States this week to decide if the Federal Reserve will start winding down its monetary stimulus.
The world’s largest economy will issue key reports on retail sales, consumer prices, housing starts, industrial production and surveys of regional manufacturing in the coming days.
Any reduction in economic stimulus by the Fed will cut the flow of cheap central bank money that has boosted market liquidity and bolstered riskier markets like commodities.
“We’ve seen the hedge funds pulling out of commodities, including oil already, everyone is on the sidelines and waiting for some clear signals from the Fed as to when they will start cutting back stimulus,” Larry said.
“The focus is really now on the US, a positive outlook on the US as will be indicated by Fed action will send ripples throughout the global economy and could very well be the driver for support on prices going forward.”
US crude and gasoline stockpiles likely fell last week, according to seven analysts polled by Reuters on Monday. The poll, which comes ahead of weekly inventory reports from the American Petroleum Institute and the US Energy information administration, forecast a 1.5 million barrels draw in crude inventories and a 900,000 barrels fall in gasoline stockpiles.