Oil is trading sideways this morning after gaining nearly 10% over the course of the week. Although OPEC’s focus on increasing deal compliance gave markets a boost over the past two days, Libya’s increased production is giving the market pause.
Libya’s oil field has been a source of volatility for years. Militant forces led by Khalifa Haftar have attempted to control oil flows, forcing Libya’s National Oil Company to declare force majeur on their output. Before the shutdown, Libya’s oil production was 1.2 MMbpd, and it’s fallen to less than 0.2 MMbpd since January. This isn’t the first time their output has come back – Libya’s output has been a roller coaster ride for over a decade. While oil output may be coming back for now, the region’s historical volatility will likely rear its head again.
OPEC is also continuing its focus on member compliance, with Saudi Arabia leading the way. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman warned that markets should feel “jumpy” and that short-traders would be hurt “like hell” for betting against oil gains. He also hinted that OPEC may hold an emergency meeting in October if market conditions warrant further actions. OPEC’s production from August is below quotas, but a few members pumped above expected levels. Saudi Arabia has historically held the role of controlling compliance, and the country seems committed to maintaining its influence over oil markets.
Prices are quiet across the petroleum complex. WTI crude is trading at $41.17 this morning, a moderate increase of 20 cents heading into the weekend.
Fuel prices are equally docile. Diesel prices are trading at $1.1578, down 0.2 cents from Thursday’s close but well above the week’s opening prices. Gasoline is trading at $1.2265, up 0.2 cents.
