Oil prices rose in trading on Monday after Syncrude reported its oil sands plant will not be fully operational until September, data showed Libyan production is dropping and the market weighed upcoming US sanctions against Iranian crude. Syncrude photo.
Oil prices jolted by updated Syncrude timeline
On Monday, oil prices were up slightly in trading. US crude gained late in the day after posting losses for most of the session on Syncrude’s updated timeline for the reopening of its Alberta oil sands facility. Brent prices rose on imminent US sanctions against Iranian crude and dropping Libyan production.
By 2:59 p.m., EDT, US WTI futures were up 24 cents to $74.04/barrel and Brent futures rose $1.12 to $78.23/barrel. The Canadian Crude Index rose 5 cents to $46.68.
Syncrude issued a press release on Monday where the company reported the Northern Alberta operation would be fully back online by September. John Kilduff, partner at Again Capital LLC said the updated timeline was a jolt of volatility for US crude trading.
The Canadian oil sands company did report that it would be partially operational in the second half of July, sooner than initially expected. The 360,000 barrels per day (b/d) facility located north of Fort McMurray has been shuttered since a power outage hobbled the plant in late June.
Crude flows to Cushing, Oklahoma, have been impacted by the shutdown. Despite the Syncrude shutdown, Cushing stocks rose slightly between Tuesday and Friday of last week, according to Genscape analysts who saw the data.
Brent crude was well supported by looming US sanctions against Iran. The Trump administration says it wants to cut Iranian crude exports to zero by November. Should global consumers abide by the Trump decision, other big producers would have to pump more crude to make up for the shortfall.
“It’s telling that the multinationals are taking this sanctions business very seriously and are preparing to pull out of Iran. That’s really crystallizing the loss of production we’re facing,” Kilduff told Reuters.
According to Reuters, the market is concerned that if the Saudis increase their production to offset losses from Iran, oil markets will be at risk of further production drops in already struggling oil producing countries like Venezuela and Libya.
“If the Saudis and others replace the losses from Iran, there will be basically no spare capacity left,” Reuters reports Societe Generale oil analyst Michael Wittner said.
Last month, the kingdom, members of OPEC and its supply agreement allies, including Russia, agreed to boost their output the dampen rising oil prices and compensate for falling production in Venezuela and Libby.
In the past five months, Libyan production has dropped by half to 527,000 b/d from a high of 1.28 million b/d in February, according to Mustafa Sanalla, head of the National Oil Corporation.
“Tomorrow it will be less and the day after tomorrow less again. And we are going lower,” Sanalla told Reuters.
The Second Libyan Civil War is an ongoing conflict amongst rival factions seeking control of the territory and oil of Libya.