Oil futures: Crude flat as USG supply returns, on track for slim weekly gains

Quantum Commodity Intelligence – Crude oil futures Friday were little changed, although production losses in Libya and the Gulf of Mexico helped to consolidate slim weekly gains.

Front-month Nov24 ICE Brent futures were trading at $71.94/b (1653 GMT), compared to Thursday's settle of $71.97/b and an intraday high of $73.24/b, up around 1% on the week.

At the same time Oct24 NYMEX WTI was trading at $68.96/b versus Thursday's settle of $68.97/b. 

Prices recovered from around three-year lows in the second half of the week after more than 40% of US Gulf offshore production was shut in, although Libyan disruptions are having a longer-lasting impact on global supplies.

Latest data from offshore operators Thursday showed that over 40%, or 730,000 bpd, of US output from the Gulf was offline, although this figure is expected to be a peak with some operators already in the process of returning staff to rigs.

In its latest update Friday, Shell said it was ramping up production at Appomattox, Mars, Vito, Ursa and Olympus, "following the resolution of downstream issues."

Perdido, Auger, and Enchilada/Salsa remain shut in due to other downstream issues, it said. 

Louisiana refiners are expected to return to normal operations over the weekend, with early estimates pointing to minimal damage.

Meanwhile, Kpler ship-tracking data revealed that Libya's oil exports may have tumbled below 200,000 bpd and while rival factions have engaged in talks to resolve the row over central bank control, much of the country's production remains shut-in.

Economy

But the price rebound has been less than convincing amid concerns over a slowing global economy, which in turn will curtail demand growth, especially from China.

"Longer-term fundamentals remain weak, and concerns surrounding the oil demand outlook could limit the upside in oil. The ongoing economic slump in China, the world's largest oil importer, has weighed on prices in recent weeks," said City Index analyst Fiona Cincotta in a research note.

This week the International Energy Agency (IEA) warned that global oil demand is cooling, while OPEC remains relatively optimistic despite trimming its own outlook earlier this week.

Last Friday, Nov24 Brent futures closed at $71.06/b but slumped to a low of $69/b this week, while Oct24 WTI settled at $67.67/b.