On Tuesday, oil prices were boosted to two-and-a-half year highs by an explosion on a crude pipeline in Libya as well as the continued OPEC-led supply cuts.
According to Libyan military source, armed men had planted explosives at the pipeline resulting in the loss of 90,000 bpd of crude oil feeding Es Sider port. The country’s output had been recovering in recent months after being held down for years by conflict and unrest.
Brent crude, the international benchmark for oil prices, gained 2.31 percent reaching $66.76 a barrel at 11:40 a.m. Prices then reached a session high of $66.83 a barrel, the highest level seen since May 2015.
U.S. crude gained 2.21 percent to $59.76 a barrel after reaching a session high of $59.86, the highest seen since June 2015. Brent has gained 17 percent year to date while U.S. crude has & improved about 11 percent in 2017.
Trading activity was light, following the Christmas holiday around the globe. Only 50,000 contracts of front-month Brent crude futures were traded, compared to the average 250,000 contracts.
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The Organization of the Petroleum Exporting Countries, as well as Russia and other non-members, have been suppressing output since the beginning of the year to get rid of the excess of supply which has been extended until the end of 2018. Iraq’s oil minister stated that global oil inventories have diminshed to an acceptable level which is earlier than the OPEC’s latest official forecast, which predicted a balanced market by the end of next year.
U.S. deliveries to China, who is one of the largest oil consumers in the world, have gained because of the OPEC-led output cuts. But, Russia remained China’s largest crude oil supplier for November and the ninth month in a row as well as surpassing Saudi Arabia so far this year, according to Chinese customs data.