Oil markets were tense onTuesday, rising on a Canadian production outage and uncertaintyover Libyan crude exports, but weighed down by climbing OPECsupplies and the intensifying trade conflict between the UnitedStates and other major economies.
Brent crude futures were at $74.80 per barrel at0617 GMT, up 7 cents, or 0.1 percent, from their last close. Brent was driven up by uncertainty around oil exports byLibya, a member of the Organization of the Petroleum ExportingCountries (OPEC). Eastern Libyan commander Khalifa Haftar's forces gavecontrol of oil ports to a separate National Oil Corporation(NOC) based in the country's east. The official state-owned oil company from the capitalTripoli, also called NOC, will not be allowed to handle that oilanymore, he said. "The move increases the risk that Libyan oil output will beshut in as the NOC in Tripoli is the only legal entity with theright to sell oil," said Sukrit Vijayakar, director of energyconsultancy Trifecta. U.S. West Texas Intermediate (WTI) crude futures wereat $68.24 a barrel, up 16 cents, or 0.2 percent. In North America, production trouble at Canada's largest oilsands facilities at Syncrude in Alberta was pushing up prices. Higher feedstock crude oil prices, as well as surging fuelexports from China, have pulled down Asian refinery productmargins to two-year lows. TIGHT SUPPLY The uncertainty over Libya's oil exports comes after OPECtogether with a group of non-OPEC partners including topproducer OPEC announced a supply rise of around 1 millionbarrels per day (bpd) aimed at cooling oil markets. Oil markets have tightened significantly since 2017, whenOPEC and its partners started withholding supply to prop upslumping prices at the time. "Despite the OPEC agreement (last week) we believe thattight supply is likely to drive oil prices higher during 2018,"Jason Gammel of U.S. investment bank Jefferies said in a note "We expect that Brent prices will be in excess of $80 perbarrel in 2H18," he added. Bank of America Merrill Lynch (BoAML) said tight marketconditions would push Brent prices to $90 per barrel by thesecond quarter of 2019. But BoAML warned of uncertainty as the impact of announcedU.S. sanctions against Iran was not yet clear, and as theeffects of the global trade dispute between the United Statesand major other economies including the European Union and Chinagradually take effect. In a gloomy sign of what may lie ahead for economic growth,the escalating trade fight has already led to sharp sell-offs instock markets, especially in Asia. "We estimate a demand drop of 44,000 bpd for every 1 percentdrop in global trade," BoAML said. (Reporting by Henning GloysteinEditing by Joseph Radford)