Oil prices bounce back as supply fears loom from Libya and Middle East
Shafaq News/ Oil rebounded onWednesday after a sharp drop in the previous session ended a three-day streakof gains as investors have whipsawed between concerns about potential supplylosses from Libya and the Middle East and worries about global fuel demand.
Brent crude futures were up 25cents, or 0.31%, at $79.80 a barrel at 0209 GMT. US West Texas Intermediatecrude futures rose 17 cents, or 0.23%, to trade at $75.70.
Prices are bouncing back fromTuesday's more than 2% decline, which snapped a three-day streak of gains ofmore than 7%, as concerns about low refinery profit margins weighed onexpectations for fuel demand amid data showing global consumption growth hasbeen lower than forecast this year.
The market was also supported byindustry data released late on Tuesday showing US oil and fuel inventories felllast week.
However, the biggest risks remainthe potential loss of supply in Libya, where about 1.2 million barrels per dayof production may be shut in amid a political dispute between rival governmentfactions, and an escalation of the Israel-Gaza conflict to involve militants inLebanon and forces from Iran, a key Middle Eastern producer.
"Geopolitical risks continue tohover over the market," ANZ analysts said in a note.
Several oilfields across Libya havehalted output as closures spread, engineers said on Tuesday, amid a disputeover control of the central bank and oil revenue.
There has still been no confirmationof any closures from the Tripoli-based government, or from the National OilCorp (NOC), which is in charge of oil resources.
However, engineers at thesoutheastern Amal and Nafoora oilfields told Reuters production had beenhalted, while engineers at Abu Attifel, also in the east, said output wasreduced.
Fighting continued in the Gaza Stripbetween Israel and Hamas militants, displacing Palestinians while there werefew signs of a concrete breakthrough in ceasefire talks in Cairo.
The lack of progress in the talks isoccurring at the same time Israel and Iranian-backed militant group Hezbollahtraded fire along the Lebanese border over the weekend.
Crude oil inventories fell 3.407million barrels in the week ended Aug. 23 last week, according to marketsources citing American Petroleum Institute figures on Tuesday. Gasolineinventories fell by 1.863 million barrels, and distillates fell by 1.405 millionbarrels.
Later onWednesday, weekly US oil storage data is due from the US Energy InformationAdministration (EIA) at 10:30 a.m. EDT.
(Reuters)
