Oil wavers as traders weigh glut fears against supply disruptions

Jessica Morris
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Petrol is being stored on oil tankers at sea (Source: Getty)

Oil prices dipped in and out of positive territory yesterday, as traders weighed fresh output disruptions against persistent oversupply fears.

Brent crude, the global benchmark, remained flat at $46.96 in afternoon trading, having fallen 1.4 per cent yesterday.

And US crude, known as West Texas Intermediate, dipped 0.46 per cent to $45.03, after settling about 1.6 per cent lower in the previous session.

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In Libya, a protest over wages that shut the eastern oil terminal of Hariga forced the operator of the Sarir field to suspend production of 100,000 barrels per day.

Production at the nearby Messla oil field could also be reduced to a minimum within four or five days if exports continue to be blocked from Hariga.

But analysts said that the embattled oil market is recovering less quickly than expected. This comes despite signs global output is falling.

"We are about to enter a period where the crude markets could start to feel more fully the pressure resulting from the come-back of Iran," Oliver Jakob at Swiss-based consultancy Petromatrix said.

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"Saudi Arabia is moving out of its peak seasonal demand for crude oil right when global refining margins are under strong pressure, and that is not a good combination."

The global oversupply of oil appears to have turned into a petrol glut - prompting traders to store diesel, which cannot be sold, at sea. Landed oil storage is also nearly full, meaning there's little support for a sustained recovery in oil prices even as production slows.

Oil traders are looking towards US oil stocks data which is due out tomorrow and Thursday to help give direction to prices.

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