Oil fell as global markets remain comfortably supplied despite the suspension of exports from Libya, and as equities faltered on political and economic worries in Asia.
Brent crude slipped as much as 1.4 percent in London, approaching $64 a barrel. Libyan ports have been closed on the order of militia leader Khalifa Haftar while he haggles over a peace settlement with the national government. Yet crude markets remain calm because “the world is awash with oil, mainly coming from the United States, International Energy Agency Executive Director Fatih Birol said in a Bloomberg TV interview at the World Economic Forum in Davos.
Prices also weakened in tandem with European stocks dropping, alongside US equity futures on Tuesday, tracking broad declines across Asia amid a series of negative developments in Hong Kong and worries about a deadly virus in China.
Brent crude dropped 86 cents, or 1.3 percent, to $64.34 a barrel on the ICE Futures Europe exchange as of 10:13 a.m. in London. West Texas Intermediate futures for February lost 59 cents to $57.95 from Friday’s close. There was no settlement Monday due to the Martin Luther King Jr. holiday.
Haftar has blocked ports under his control in a show of defiance after world leaders failed to persuade him to sign a peace deal ending the country’s civil war. In Iraq, protests have halted a minor field and rockets reportedly hit the Green Zone in Baghdad after a weekend of unrest.
It’s the third time in four months that a supply crisis in OPEC nations has been largely shrugged off. Brent soared to almost $72 a barrel two weeks ago as hostilities between the US and Iran erupted in neighboring Iraq over the assassination of an Iranian general, endangering regional energy exports, yet prices soon eased off as a wider conflict was averted.
“It would have to be a very substantial disruption to push prices above $70 a barrel on a sustainable basis, Jeff Currie, head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg TV interview. “The US is still sitting on an enormous amount of inventory.”