Energies –
Oil futures dropped midday yesterday and this seemed to be related to news that Libyan rivals have agreed to set up a power-sharing “Presidential Council.” The two sides agreed to dissolve their militias and fight terrorist groups inside Libya. Obviously one has to take this agreement with a bit of skepticism considering the history here, but this would be “good“ news for the country in terms of oil production. As you can see, Libyan oil production has really struggled to recover to pre-2011 levels due to the constant in-fighting by militant rivals. If the two sides can even somewhat follow through on this, it adds significantly to the country’s oil production. Interestingly, at the same time this story hit the wires, the Saudi prince was also making headlines discussing fiscal matters within the kingdom. It almost seems as if this story got lost in the shuffle yesterday, but I think it could prove important.
The weekly inventory data is out this morning. Expectations call for a decline of 3.5 mil barrels in crude oil stocks. Gasoline and distillates are both expected to increase 1.0 mil. API reported yesterday crude oil stocks were down 4.16 mil barrels, helping support overnight price action. Also supporting prices overnight is word that Russia apparently is onboard with extending the OPEC production cuts. Russia has apparently hit its target for production cuts at this point. This hasn’t seemed to created a major market reaction, and again I point out that the cut extension is basically a known item at this point.
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