Oil futures: Crude higher but off early gains, Libya output eyed

Quantum Commodity Intelligence – Crude oil futures were climbing higher on renewed supply concerns Thursday as benchmarks recovered following two days of losses, although much of the day's gains had been given up heading into the European close.

Front-month Oct24 ICE Brent futures were trading at $78.48/b (1655 GMT), compared to Wednesday's settle of $77.69/b, while the more-liquid Nov24 contract was trading at $78.95/b. Earlier in the session, Brent had posted a high of $79.56/b.

At the same time Oct24 NYMEX WTI was trading at $75.67/b versus Wednesday's settle of $74.52/b.

Concerns over weak demand growth and sluggish refining margins have offset geopolitical concerns following the early-week bounce, while investors were eyeing OPEC's next move with the group set to make a final decision on planned Q4 production hikes.

"Overall, the tug-of-war between demand pessimism and supply disruptions will likely keep prices rangebound for now," said Saxo in its latest commodities research note.

Libya

However, prices were potentially finding renewed support on Thursday with the situation in Libya said to be deteriorating, amid reports that the 200,000 bpd Sarir field was in the process of shutting down following disruptions at the El Feel, Amal, Nafoora and Abu Attifel systems.

The ongoing row between rival factions on control of the central bank could lead to extended disruptions, warned analysts.

Conflicts in the Middle East and Eastern Europe have taken a backseat in the latter part of the week, although both remain firmly on the radar of oil traders.

Meanwhile, Wednesday's EIA data showing US commercial crude stocks eased last week was largely neutral for markets, with the modest 846,000-barrel draw missing expectations for a drop of 2-2.5 million barrels.

The same report revealed US gasoline stocks hit a nine-month low last week as output also slumped to six-week lows but did little to support underperforming RBOB cracks, which has left the 3-2-1 crack languishing at around $15/b.

There was some slightly better news on the economic front as data showed US consumer confidence increased to 103.3 points in August from 101.9 in the previous month, although concern remains over the state of the labour market.