WTI bulls quick to cash in on Libya opening spike
- WTI moving into Asia session down o the day following supply to bullish opening gap.
- Weekend reports surrounding the unrest in Libya and Iraq send futures higher.
Oil prices were on the backfoot on Monday following a bullish opening gap in Asia which was closed in the North American hours with vengeance from the bears. West Texas Intermediate crude spot prices retreated from an opening high of $59.61 and travelled to a low of $58.49.
The initial hysteria came from the weekend reports surrounding the unrest in Libya and Iraq. This lead to the opening gap spike due to the conflict resulting in substantial supply disruptions on a day when there will be no regular trading or settlements in New York for oil to mark the Martin Luther King Jr. holiday.
However, crude futures for January delivery rose 59 cents, or 1%, to $59.17 a barrel as the markets were quick to cash in on the concerns whereby production of 1.2 million bpd (barrels a day) are expected to be disrupted due to the pipeline closures in Libya with about 800k bpd of that figure already completely taken out.
Ceasefire talks broke down, oil rallies on pipeline closures
"As ceasefire talks broke down, Eastern General Haftar opted to shut the nation's oilfields," analysts at TD Securities noted:
"The pipeline from El-Sharara, the country's largest field, to the Zawiya refinery has been shut, suggesting the field will soon halt production as their storage tanks fill. Although the outage is likely to prove temporary, the market's indifference to as much as 1m bpd of lost supply is noteworthy, as it highlights that the oil market has been conditioned to shrug off supply disruptions, relying on oversupply and spare capacity to fill any gaps. In this context, we do not expect substantial changes in positioning from CTAs."