Oil rises toward $56 on Libyan field shutdown, Syria
By Catherine Ngai
NEW YORK (Reuters) - Oil rose toward $56 a barrel on Monday, supported by another shutdown at Libya's largest oilfield over the weekend and geopolitical tensions following last week's U.S. missile strike on Syria.
Libya's Sharara oilfield was shut on Sunday after a group blocked a pipeline linking it to an oil terminal, a Libyan oil source said. The field had only just returned to production, after a week-long stoppage ending in early April.
The outage adds fuel to a rally that started late last week after the United States fired missiles at a Syrian government air base. While analysts point out that Syria produces only small volumes of oil, the Middle East is home to more than a quarter of the world's oil output.
Rising tensions in the region has the potential to produce knee-jerk rallies in oil, even if major producing countries nearby like Iran, Iraq or Saudi Arabia, are not affected.
"There are a few geopolitical problems at the moment. On top of that, Libya isn't producing oil, so that's adding to the bullish side of the market," said Phil Flynn, an analyst at Price Futures Group in Chicago.
Brent crude LCOc1, the global benchmark, rose 74 cents to settle at $55.98, not far from the one-month high of $56.08 reached on Friday. U.S. crude CLc1 was up 84 cents to settle at $53.08.
Oil prices have also been supported by a deal led by the Organization of the Petroleum Exporting Countries to cut output by 1.8 million barrels per day for the first six months of 2017, to get rid of excess supply. Libya and fellow OPEC member Nigeria are exempt from cuts.
In a sign of OPEC confidence that the deal is working, Kuwait's oil minister said he expected producers' adherence in March to their supply cut pledges to "be higher than the previous couple of months." Continued...