Oil prices drop as Libya moves to boost exports

In this file photo taken with a long exposure, a pumping unit sucks oil from the ground near Greensburg, Kansas. AP FILE

NEW YORK, United States — World crude prices sank Wednesday as Libya’s state oil company said it would double production within four weeks after rebels handed it control of the vital Oil Crescent ports.

Also supporting prices was the weekly US oil reserves report, which showed an unexpectedly sharp increase in stockpiled refined products while crude stocks were only slightly lower.

US crude benchmark West Texas Intermediate (WTI) for delivery in October fell $1.32 to $43.58 a barrel.

In London, Brent North Sea crude for November delivery lost $1.25 to $45.85 a barrel.

The fall came after Libya’s National Oil Corporation said it would start working “immediately” to restore exports from the key ports that were seized from the government by rival troops on Sunday and Monday, threatening the country’s financial lifeblood.

On Tuesday the rebels said they would turn the ports over to NOC.

Shortly after that NOC Chairman Mustafa Sanalla said in a statement that it could raise production from the current 290,000 barrels a day to 600,000 barrels “within four weeks.” By the end of the year, he said, NOC could by production 950,000 barrels a day.

That would add a substantial supply of crude to world markets even as the OPEC cartel and Russia are to hold talks this month on capping output.

Sanalla stressed in a statement that meeting those goals depends “on the Oil Crescent ports and the closed pipelines in the southwest being opened and kept open.”

Meanwhile the US Department of Energy reported Wednesday that commercial crude inventories fell about 600,000 barrels in the week to September 9, but that a jump in stored refined products meant the overall petroleum stocks balance jumped by 6.0 million barrels.

“The oil report was not as bullish as the headline number may have suggested, so concerns about oversupply remain firmly in place,” City Index oil analyst Fawad Razaqzada told AFP.

“Not only did stocks of gasoline and distillates rise sharply, crude production was up for the first time in four weeks, too.”