Brent at 5-month low below $105 as Libya oil deal expected

Brent crude hit a 5-month low reaching below $105 on Thursday over a potential rise in Libyan supply. (File photo: Reuters)

Brent crude eased further under $105 on Thursday - to its lowest since November - as oil dealers anticipated a rise in Libyan supply after the government neared a deal with rebels to reopen oil ports.

Brent has dropped more than $3 this week, narrowing its gap with the U.S. oil benchmark - a closely watched and heavily traded spread - to the slimmest since September.

Brent crude slipped 12 cents to $104.67 a barrel by 9:55 GMT. U.S. crude, or West Texas Intermediate (WTI), fell 36 cents to $99.26 a barrel.

Hopes were lifted for an end to an eight-month standoff that dried up oil exports and revenue in Libya as a government spokesman said an agreement with rebels to reopen key oil ports could be finalized in two to three days.

The restart of Libya's eastern oil ports could release about 600,000 barrels per day (bpd) of crude, although some analysts remained cautious.

"I won't rule out the possibility that it might be another empty promise but it definitely has an impact on market sentiment," Phillips Futures analyst Tan Chee Tat said.

Libya's crude output has fallen to around 150,000 bpd from 1.4 million bpd in July when a wave of protests started across the north African country, whose proximity to Europe just across the Mediterranean makes it a strategic energy supplier.

In the short term, demand for Libyan oil is likely to be limited due to reliability issues, while shipping and insurance costs are expected to rise in light of the recent hostilities.

U.S. crude losses were checked by a surprise drop in inventories last week and as stockpiles at WTI's delivery point in Cushing, Oklahoma, fell for the ninth week, Energy Information Administration data showed.

Brent's premium to WTI <CL-LCO1=R> stood at $5.42, off $4.81 reached on Wednesday, its narrowest in more than six months.

Oil may draw support from data showing U.S. companies stepped up hiring in March, offering fresh evidence the economy was regaining momentum after a weather-driven lull over the winter.

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Last Update: Wednesday, 20 May 2020 KSA 09:42 - GMT 06:42
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