WSJ:OIL FUTURES: Crude Up; Time Needed To Bring Libyan Oil Online
By Cheang Chee Yew
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Crude-oil futures traded higher in Asia Tuesday on expectations that a resumption of Libyan oil production would take some time, while the market turned its attention to Federal Reserve Chairman Ben Bernanke's Jackson Hole speech Friday.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $85.47 a barrel at 0649 GMT, up $1.05 in the Globex electronic session. October Brent crude on London's ICE Futures exchange rose $0.61 to $108.97 a barrel.
In Libya, fighting continued in capital Tripoli, dashing hopes of rebel forces and their international allies that resistance put up by Col. Moammar Gadhafi and his supporters would fade.
"I don't think Libyan crude production will resume quickly," Tokyo-based Newedge Japan trader Yusuke Seta said. "It'll take a while, up to three years."
A spokesman for the rebel-controlled Arabian Gulf Oil Co. said Sunday that the company could restart up to 180,000 barrels a day of production soon.
It could take much longer for Libya's oil production to fully return to its previous levels, at which 1.3 million barrels were exported.
Brent crude prices will likely be influenced by the potential return of Libyan supplies to the market, especially in Europe.
"We still think that regime change in Libya could ultimately knock as much as $10 from the price of a barrel of Brent," analyst Julian Jessop of Capital Economics said in a note to investors.
"Hefty falls in the price of Brent as the Middle East risk premium evaporates" are likely, with the market possibly falling below $100 in a matter of weeks, if not days, and to $85 a barrel by 2012, he said.
Traders are also looking ahead to Bernanke's upcoming speech amid speculation the central bank chief may outline fresh steps to stimulate the ailing U.S. economy.
"Markets expect him to provide concrete ideas for the U.S. economy, which may be supportive for oil prices," Newedge's Seta said.
Nymex reformulated gasoline blendstock for September--the benchmark gasoline contract--rose 133 points to $2.8484 a gallon, while September heating oil traded at $2.9315, 208 points higher.
ICE gasoil for September changed hands at $929.75 a metric ton, up $14.25 from Monday's settlement.
