(Bloomberg) — Oil climbed as signs of supply disruption in Libya helped counter fading optimism about interest rate cuts.
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US benchmark West Texas Intermediate added 0.8% reversing an earlier loss. Libya’s Sharara field, the country’s largest, has begun the process of fully shutting down after protests. In recent times, it had been pumping about 300,000 barrels a day.
That helped cool some of an earlier malaise, with traders paring back bets on the scale of interest-rate cuts from major central banks. The reduced wagers had led to one of the worst-ever concerted slumps in stocks and bonds in a year’s first session.
Traders are assessing whether strong non-OPEC supply will remain a dominant oil-market theme in again 2024. Higher output from outside of the producer group has so far countered its efforts to tighten the market — but extended curbs take effect this week.
Read More: Oil’s Ample Supply Has Analysts Predicting Tough Year for Crude
There’s also a continued focus on the renewed tensions in the Middle East. Iran’s dispatch of a warship to the Red Sea represents its most audacious move to challenge US forces in the key trade route and may embolden Houthi militants that have disrupted shipping in the waterway to protest Israel’s invasion of Gaza. Even so, oil flows have been relatively lightly affected so far.
“There’s not really any disruption to the physical supply in the market,” Neil Beveridge, a senior analyst at Sanford C Bernstein, said on Bloomberg Television. “Markets look fairly balanced coming into the year, so it leaves OPEC with quite a lot of work to do to support prices at current levels.”
In another sign the crude market remains amply supplied, nearby time spreads for the global Brent benchmark flipped into a bearish contango structure on Wednesday. The pattern, where nearby prices are cheaper than later ones, tends to indicate surplus.
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Read More:Oil Climbs as Libya Field Shutdown Helps Break Early-Year Gloom
2024-01-03 12:58:23