Libyan oil production recovery to pull Brent prices down
Azerbaijan, Baku, Nov. 15 / Trend A.Badalova/
The quick recovery of Libyan oil production will lead to further decrease of Brent prices and help to reduce the spread between Brent and WTI, the U.S. Energy Security Analysis, Inc. (ESAI) Head of the Oil Markets Department Rick Mueller believes.
"Certainly the quick recovery to date is helping to narrow the Brent premium to WTI, which has come down to just $14 per barrel, much lower than its earlier levels," Mueller told Trend via e-mail.
Along with the bearish economic news from Italy and elsewhere in the region, this could combine to pull Brent prices down still further, Mueller believes.
Recently the spread between the prices of the two oil benchmarks shrank to $15 from the record $25. One of the reasons for significant drop in Brent-WTI spread was the debt crisis in European crisis, which had its influence on world oil market too.
Last week Libya's Acting Oil Minister Ali Tarhouni said a great progress was made in resuscitating the country's oil fields and that oil production level would return to more than 40 percent of its prewar level by late 2011. He said the Libyan oil production could reach 700,000 barrels per day by late 2011.
Mueller believes the projections by the Libyan minister seem optimistic.
According to ESAI forecasts, Libyan production will only reach 1 million b/d by the end of 2012.
These forecasts are close to the International Energy Agency's (IEA) ones, which expects Libya to produce around 1.17 million barrels per day by late 2012.
Before the Libyan crisis, the country produced 1.6 million barrels per day and 1.3 million barrels of these volumes were exported.
Following the auction on November 14, the price on Brent futures for December decreased by $2.27 a barrel up to $111.89 per barrel. The cost of WTI futures for December on the New York Mercantile Exchange decreased by $0.85 to $98.14 per barrel.