Oil slides as IEA surplus forecast overshadows Libya disruption - Reuters

LONDON (Reuters) - Oil prices fell on Wednesday as an International Energy Agency (IEA) forecast of a market surplus in the first half of 2020 outweighed concerns about disruptions that have slashed Libya’s crude output.

FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019. REUTERS/Christian Hartmann

Brent crude LCOc1 was down 43 cents, or 0.7%, at $64.16 a barrel at 0941 GMT. West Texas Intermediate CLc1 also fell 43 cents to $57.95 a barrel, having declined 0.3% the day before.

The head of the IEA, Fatih Birol, said he expects the market to be in surplus by one million barrels per day (bpd) in the first half of this year.

“I see an abundance of energy supply in terms of oil and gas,” Birol told the Reuters Global Markets Forum on Tuesday, while attending the World Economic Forum meeting in Davos.

“It’s the reason that recent incidents we have seen - with the Iranian general killed, Libya unrest - didn’t boost international oil prices,” Birol said, referring to the U.S. killing of an Iranian commander and retaliation by Tehran that boosted prices briefly earlier this month.

Libya’s National Oil Corp on Monday declared force majeure on the loading of oil from two major oilfields after the latest development in a long-running military conflict.

Unless oil facilities quickly return to operation, Libya’s oil output will be reduced about 72,000 barrels per day (bpd) from about 1.2 million bpd.

Financial markets are also watching the emergence from China of a new strain of a coronavirus and the possible impact which a pandemic might have on global economic growth.[MKTS/GLOB]

Should the new virus develop dramatically and hit travel and growth, demand for oil could fall by 260,000 bpd, Goldman Sachs said in a note.

“Demand concerns over a potential epidemic will counter concerns around supply disruptions in Libya, Iran and Iraq, driving spot price volatility in coming weeks,” Goldman said, although the “impact on oil fundamentals remains limited so far.”

Supply is still likely to rise, with U.S. crude production in large shale deposits expected to rise to record highs in February, although the pace of increase is likely to be the lowest in about year, the U.S. Energy Information Administration (EIA) said on Tuesday.

Inventories of crude oil in the U.S. are likely to have fallen for a second week last week, according to a Reuters poll, although gasoline stocks are forecast to have risen for an 11th week in a row. [EIA/S]

(GRAPHIC: U.S. petroleum inventories click, here)

Reporting by Noah Browning and Aaron Sheldrick; editing by Jason Neely

Our Standards:The Thomson Reuters Trust Principles.

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