- Oil markets are feeling the pressure as Libyan output concerns are jamming up against OPEC production hikes.
- OPEC planned production increases may be less than initially expected, but prices are still being pressured to the downside.
Oil market tensed up on Tuesday as Libyan forces exchanged oil ports with the National Oil Corporation, a company who counter-intuitively is not tied to Libya’s state-run oil companies, and Libya has lost access to those oil ports. Market prices popped on the news, but OPEC’s plans to increase production limits are keeping prices weighed down for now.
OPEC will be set to lift daily oil production caps soon, though the limit lift will be for less than markets had initially feared, with Saudi Arabia pushing for a one million bpd production limit hike, though key OPEC countries like Iran are arguing for a comparably smaller increase of 600-800 thousand barrels. The move still represents a loosening of OPEC’s tight controls on oil production, and prices have been hobbled by the news, which first came out of a Saudi Arabia-Russia joint statement some weeks ago.
WTI levels to watch
With crude slumping into yesterday’s lows at 67.50, a further decline will see a long drop into last Friday’s lows near 65.50, while a bullish recovery will have to break back over the 68 key handle before moving on to challenge the current week’s high near 68.90.
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