Oil hits $68 on Libya force majeure despite pandemic surge

Oil on Tuesday hit one-month high and crossed $68 a barrel despite rising coronavirus cases in Asia as disruption in Libyan exports, decline in the US dollar value and a possible decline in US crude inventories supported the upward price trend.

Brent crude climbed 64 cents, or one per cent, at $67.69 a barrel by 1004GMT after hitting its highest since March 18 at $68.08. US West Texas Intermediate (WTI) crude gained 60 cents, or one per cent, to $63.98.

Libya’s National Oil Corp (NOC) declared force majeure on Monday on exports from the port of Hariga and said it could extend the measure to other facilities due to a budget dispute with the country’s central bank. Hariga is scheduled to load about 180,000 barrels per day (bpd) in April.

“Ongoing dollar decline is supporting gains in crude oil. From its low of 1.17 seen during last week of March, euro is up by 3.5 per cent against the US dollar. This has helped support the overall risk market sentiment with core commodities including energy equally benefiting from the same,” said Vijay Valecha, CIO, Century Financial.

Analysts and energy experts said oil was underpinned by a weak US dollar, which makes oil cheaper for buyers using other currencies. In a research note, ING Economics said the US dollar weakness continues to offer support to the commodities complex.

“WTI and Brent support can be seen at $60 and $64 a barrel, respectively. On the upside, benchmarks are likely to run into resistance levels of $67.30 and $70.70, respectively,” Valecha said.

Worldwide coronavirus cases have exceeded 141.7 million and a surge in infections in India, the world’s third-biggest oil importer, has dampened optimism for a sustained demand recovery.

“Tsunami of new Covid–19 cases across India will act as a reminder to the global economy that we are not out of the woods yet,” Valecha said.

Gold eases off seven-week peak

— muzaffarrizvi@khaleejtimes.com