Brent crude prices were speculated to decline due to the reopening of oil ports in Libya, but the same reason that closed the ports are keeping them closed: rebels. Libyan rebels refused to turn over three oil ports to the new government, and Brent futures rose 1.8 percent in Monday’s session. The rebels leader, Ibrahim Al Jedran, said he would refuse a turnover of the ports unless the government met his demands. Es Sider and Ras Lanuf, the two largest ports, are among the three being held at ransom.
“We had expected a short-covering rally this morning,” said Amirta Sen, chef oil strategist at Energy Aspects Ltd. The inane demands have yet to be met, and shorts were likely to have been squeezed since both parties are unlikely to come to an agreement. Al Jedran wants revenue derived from Libyan oil projection.
Libya’s production will take another hit. Total SA, the largest oil company in France, will not be supplying crude out of Libya because of labor strikes that led to production stoppages. Michael McCarthy, a chief strategist at CMC Markets, said that the port shutdowns are “short-term positive.”
Wext Texas Intermediate (WTI) crude stabilized after declining from a $7 rise in future prices. WTI will be under pressure Wednesday as the Energy Information Agency (EIA) will release weekly inventory data that will potentially show further increases in stockpiles. “Inventory figures will be important against a background of significant stockpile build-up,” according to Ric Spooner, chief analyst at CMC Markets.