Oil is a commodity that is quickly losing steam, a feat that has become apparent after oil prices hit an all-time low since 2015.
The global oil benchmark, Brent crude, dipped 1.1 percent to $65.72 a barrel on the ICE Futures Exchange in London. As for the U.S. West Texas Intermediate, crude futures were at $59.57 a barrel, 40 cents lower than their previous settlement. In the previous session, WTI registered $60 percent a barrel for the first time in two-and-a-half years.
The price spike was due to a pipeline blast in Libya which derailed supplies and is expected to reduce oil production by up to 100 thousand barrels a day, according to Libya’s National Oil Co.
This is the second oil disruption that has affected global oil prices in recent weeks, the first one being an outage of the Forties Pipeline System in the North Sea. That outage disrupted the flow of 450 thousand barrels a day.
While Global Risk Management, a fuel consulting firm, claims that the Libyan pipeline won’t become operational in the near future, the Forties Pipeline System is expected to resume operations in 2018.
The latest Lybian outage will only affect the global oil market further, as JBC Energy notes. According to the gas and oil research center, the Forties pipeline restart would not be able to compensate the recent explosion as well as other gasoline shortages that have occurred around the world.
“… reports of gasoline shortage in Nigeria and a cold spell in part of North America took the market by surprise,” said JBC Energy.
According to the firm, oil prices can fall below $60 a barrel sometime in February with the worst case scenario being $55 a barrel.
Olivier Jakob from the Swiss-based Petromatrix thinks the recent Lybian outage is not enough to throw the oil market into disarray, however, he believes that other global disruptions would likely add up.
The net global impact of both the Forties and Lybian outages totals to about 500 thousand barrels per day.
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