Libya’s output was said to fall to about 500,000 barrels a day after a pipeline carrying crude from the Sharara field -- its biggest -- stopped operating. Clashes between armed groups in the nation have previously led to market disruptions, and the latest news drove New York oil futures up as much as 1 percent after boosting them 1.3 percent on Tuesday. Prices are headed for two straight days of gains for the first time in more than a month. The production drop in Libya, which was pumping 700,000 barrels a day before the pipeline halt, is at least temporarily easing concern that rising U.S. supply is offsetting the effect of curbs by the Organization of Petroleum Exporting Countries and its allies. U.S. industry data on Tuesday was said to show crude inventories climbed last week, and a government report Wednesday is also forecast to show stockpiles expanded. Six OPEC nations have joined with non-member Oman to voice support for prolonging their output cuts past June. click Read More below for more of the story
As a year of deep cuts in exploration and production amid an oil glut draws to a close, the oil industry is facing the contradictory possibility of a crude shortage, Georgi Kantchev and Bill Spindle report. “A big gap is forming in oil-industry investment,” said Claudio Descalzi, chief executive of Italian energy company Eni SpA. “That will lead in two to three years to an imbalance between supply and demand that will push prices higher.”
Global exploration-and-production investment is expected to have fallen by $170 billion, or 20%, this year, and investment could fall by one-fifth next year if oil prices average $50 a barrel. That would be the first time the industry has registered two straight years of investment drops in 30 years. The oil industry needs to replace 34 billion barrels of crude every year to satisfy expected consumption growth, but decisions for only eight billion barrels were made in 2015.
“The stage is set for a supply crunch down the line,” said Miswin Mahesh, an oil analyst at Barclays. “Supply from existing fields will fall, while new projects won’t come online to replace them.”
The supply of U.S. crude on the world market, however, will rise after the lifting of a 40-year ban, and ConocoPhillips and NuStar Energy LP are ready, Lynn Cook and Erin Ailworth report. Both plan to finish loading what will be the first tanker of freely traded U.S. crude oil in four decades, and the first shipment could sail from a NuStar dock in Texas as early as New Year’s Eve.
Oil prices threw economic forecasts for the biggest loop of the year, Josh Zumbrun reports. As Saudi Arabia tackles the low prices with economic reforms, its stock exchange plans to sell shares in an initial public offering in 2018, Ahmed Al Omran reports. But the country won’t alter its current oil-production policy.
Oman’s cabinet approved in principle fuel-subsidy reforms and spending cuts to deal with low oil prices, Reuters reports.