By Geoffrey Smith
Investing.com -- Crude oil prices hit fresh 13-month highs on Tuesday as the U.S. government predicted a slow return to pre-pandemic levels of production for the domestic industry, while the global spot market continued to tighten partly due to export problems in Libya.
By 12 PM ET (1700 GMT), U.S. crude futures were up 0.3% at $58.14 a barrel, some 40c off their intraday high, while Brent crude futures were up 0.4% at $60.94 a barrel.
U.S. Gasoline RBOB Futures prices weakened, however, losing 0.8% to $1.6655 a gallon. Natural Gas Futures were likewise off their recent two-year high but were still reasonably supported by heating demand, at $2.8355 per million British thermal units.
Overseas, the market is tightening as Asian demand picks up and as Libya, a pivotal OPEC member that is exempted from the pact on output, continues to experience export disruptions due to a strike by armed guards at the port of Hariga, who claim not to have been paid. Newswires report that the country’s exports have fallen by nearly 200,000 barrels a day from their recent peak.
The pact between OPEC, Russia and other major exporters stops them from replacing the lost supply.
In the U.S., the Energy Information Administration said it doesn’t expect the country’s oil industry to return to pre-pandemic levels of production until 2023, not least because it expects the sector to have to fight harder for investment dollars in future.
“The oil and natural gas industry was already headed toward relying on capital from cash flow instead of debt and equity,” the EIA said in its 2021 outlook, published on Tuesday. “COVID-19 has accelerated this trend, leaving producers more dependent on internal sources of cash flow because outside funding sources are less available or require higher rates of return.”
OPEC and the International Energy Agency are also due to publish their latest updates on the global market outlook in the course of the week.
Later Tuesday, the American Petroleum Institute will release its weekly assessment of U.S. oil and product inventories. Analysts expect crude stocks to have risen by just under 1 million barrels last week.