Crude oil futures jump on Libyan supply disruption, Russian oil concerns

Crude oil futures were higher in mid-morning Asian trade April 18, building on gains from late last week amid Libyan supply disruptions and the prospect of further reductions in Russian oil supply.

At 10:40 am Singapore time (0240 GMT), the ICE June Brent futures contract was up 85 cents/b (0.76%) from the previous close at $112.55/b, while the NYMEX May light sweet crude contract rose 65 cents/b (0.61%) at $107.60/b.

Libya's National Oil Corp. said April 17 that it declared force majeure on deliveries of Mellitah crude oil exports after the El Feel, or Elephant, oil field was closed.

The 70,000 b/d El Feel oil field was closed on April 16 after protests demanding the ouster of the country's prime minister, Abdul Hamid Dbeibah, the NOC said on its website.

"Oil prices continued its ascent following concerns of supplies disruption in Libya, along with a warning by Russia of higher prices if more nations joined a ban on Russian energy imports," IG market strategist Yeap Jun Rong said in an April 18 note.

Both ICE Brent and NYMEX crude were on track to rise for a third straight session, with sentiment boosted in recent days by a potential EU-wide ban on Russian energy imports and the prospect of the Ukraine war lasting longer than expected.

Nonetheless, existing EU sanctions are expected to further crimp purchases of Russian oil and gas next month, as traders shy away from deals due to ambiguous wording and growing unease over sourcing Russian commodities.

Russian oil volumes handled by Vitol will fall sharply in the second quarter of 2022 as current term contracts expire, a source close to the company said April 14. The trading house also plans to end all Russian energy imports under supply deals by year-end, the source said.

A spokesperson for Trafigura said the company expects its Russian traded volumes will be "further reduced from May 15", adding that it will comply in full with all applicable sanctions.

On the demand side, oil-consuming giant China's battle with COVID-19 was mixed. COVID-19 infections in Hong Kong over the weekend fell below the 800 mark for the first time in nine weeks, with city authorities saying April 14 they will start to ease some restrictions from April 21.

On the mainland, however, more cities, including Zhengzhou, Xi'an and Suzhou, were announcing movement restrictions or otherwise encouraging residents to stay home where possible.

COVID-19 cases in Shanghai, currently the epicenter of the outbreak on the mainland, remained high. The city reported 2,417 symptomatic cases and 19,831 asymptomatic cases as of April 17, the local government said on its official WeChat account April 18.

Dubai crude swaps and intermonth spreads were higher in mid-morning trade in Asia April 18 from the previous close.

The June Dubai swap was pegged at $106.51/b at 10 am Singapore time (0200 GMT), up $4.56/b (4.47%) from the April 14 Asian market close.

The May-June Dubai swap intermonth spread was pegged at $1.48/b at 10 am, up 1 cent/b over the same period, and the June-July intermonth spread was pegged at $1.52/b, up 22 cents/b.

The June Brent/Dubai EFS was pegged at $6.72/b, up 6 cents/b.