Oil prices briefly spiked Monday, in apparent reaction to a fire at the Libyan oil port of Es Sider the past few days.
But prices settled down again, to their lowest levels since May 2009, after the blaze was put out in three of the six oil tanks, Bloomberg reported.
Libya was pumping about 352,000 barrels of crude a day until a rocket attack at the port on Christmas Day reduced production to 128,000 barrels a day. In 2010, Libya was pumping about 1.6 million barrels a day, but that was before the overthrow and killing of longtime ruler Muammar Gaddafi in October 2011, an event that unleashed a civil war.
The attack at Es Sider was enough to prompt an early rally in the commodity Monday, but by the end of the trading session Brent crude was down $1.57, to $57.88. The U.S. benchmark, WTI, fell $1.12, to $53.61. That’s the lowest level since May 1, 2009.
The rally followed by the steep drop showed the market’s fears about oversupply are not going away, said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. “Every time the market tries to pick itself up, it’s just another wave of selling,” he said.
Tim Evans, an energy analyst at Citi Futures Perspective in New York, told Bloomberg that neither the violence in Libya, nor the reduction in the growth rate of U.S. drilling, was enough to make a dent in the worldwide glut of oil. “We’re looking at a significant supply-demand surplus through the first half of 2015,” Evans said.
“The loss of a couple hundred thousand barrels from Libya will have a minimal impact on the global supply balance,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “There’s about 2 million barrels a day of excess production right now, so this will just tighten things a little.”