Libyan Rebels Holding Key to Brent Crude Curve - Bloomberg

Libyan Rebels Holding Key to Brent Crude Curve - Bloomberg:



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Armed militias have blocked exports from several oil terminals in Libya, once North Africa’s biggest producer, since July. The structure of Brent crude futures, used to price at least half the world’s supplies, is also in their hands. 




Rebels seeking self-rule for Libya’s eastern regions agreed to surrender two oil ports to the government on April 6. The two remaining export facilities they control will be handed over in two to four weeks, according to the country’s government. Speculation last week that such a deal was brewing flipped the front-month Brent contract in London into a discount to the second month for the first time since November. Whether this price structure, known as contango, is sustained depends on whether the deal in Libya holds.



The CHART OF THE DAY shows that the last extended period of contango in Brent ended with the uprising against former Libyan leader Muammar Qaddafi in early 2011, which removed about 1.6 million barrels a day of oil from the market. Recoveries in the country’s supplies have corresponded to moves back into contango. Conversely, the premium on immediate deliveries, called backwardation, has climbed when Libyan output has faltered."



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