Explosion at major oil pipeline in Libya

Sean Reid
December 30, 2017

Brent crude, the worldwide benchmark for oil prices, went up 10 cents to $65.35 a barrel, while U.S. crude added 12 cents at $58.59, Reuters reported.

Crude oil prices have been on a rise ever since the oil producing group Opec chose to extend output cuts. The spread between the benchmarks widened throughout the year, as Brent responded to the drawdown in supply from major world producers while US output continued to grow.

Oil markets have tightened after a year of production cuts led by Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation.

"That trend is likely to continue into 2018 and worldwide oil inventories will continue their decline", said Andrew Lipow, president of Lipow Oil Associates in Houston. Brent hit $67.10 in intraday trading, the highest price for the grade since May 2015. Brent crude futures were unchanged at $66.44 a barrel.

The U.S. Energy Department said crude stocks fell 4.6 million barrels in the latest week.

"We see USA supply continuing to grow next year but are less concerned about a sudden supply glut re-emerging as rising D&C [drilling and completion] costs will likely slow production growth", Ashley Petersen at Stratas Advisors told Reuters.

USA output is up nearly 16 percent since mid-2016.

"The U.S. shale impact is now encroaching on uncharted territory", analysts at RBC Capital Markets wrote this month, saying it had "redrawn the global crude flow map". Inventories excluding the nation's strategic reserve have declined more than 11 per cent in the previous year.

In the most recent week, USA production dipped modestly to 9.75 million bpd from 9.79 mln bpd the previous week.

An explosion has rocked a crude oil pipeline that feeds the Es Sider sea terminal in Libya, an oil source in the country said.

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