West Texas Intermediate crude fell below $100 a barrel and Brent tumbled to a three-month low as supply-disruption concerns eased with Libyan output gains and as Iraqi shipments are unaffected by an insurgency.
Libya is seeking to boost oil exports after two ports reopened and Iraqi lawmakers today elected a speaker of parliament. U.S. crude output rose to the highest since 1986 in the week ended July 4, and further gains are likely as benign summer weather is expected to increase pumping from North Dakota, the second-largest oil-producing state.
“The market may have a hard time handling the surge in Libyan oil production,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “In a very short time the market has moved from concerns about insufficient supply to what may turn into an oversupply situation.”
WTI for August delivery fell $1.15, or 1.1 percent, to $99.76 a barrel at 9:30 a.m. on the New York Mercantile Exchange. Futures touched $99.60, the lowest since May 6. The volume of all futures traded was 85 percent above the 100-day average for the time of day. Prices have advanced 1.4 percent this year.
Brent for August settlement dropped $1.61, or 1.5 percent, to $105.37 a barrel on the London-based ICE Futures Europe exchange. It reached $105.15, the lowest level since April 7. The contract expires tomorrow. The more-active September futures slipped $1.30, or 1.2 percent, to $106.41.
The European benchmark crude traded at a $5.60 premium to WTI, down from $6.07 yesterday