THE WALL STREET JOURNAL

Oil Prices Settle Higher


Analysts expect the global market to stay oversupplied through the first half of the
year


By Nicole Friedman And Georgi Kantchev / Updated Feb. 17, 2015 3:07 p.m. ET


NEW YORK—Oil prices gained Tuesday, reversing earlier losses, as traders weighed concerns
about Iraqi and Libyan production against an oversupplied market.


Light, sweet crude for March delivery settled up 75 cents, or 1.4%, at $53.53 a barrel on the New
York Mercantile Exchange, the highest settlement since Dec. 30.


Brent, the global benchmark, rose $1.13, or 1.8%, to $62.53 a barrel on ICE Futures Europe.


Oil prices have plunged since June as ample global supply growth outweighed tepid demand, and
many analysts expect the market to stay oversupplied through the first half of the year. However,
recent violence and bad weather has affected output from Libya and Iraq, two major oil
producers.


Egyptian airstrikes against Islamic State targets in Libya have added to the turmoil in the country, already
reeling from sabotage of its oil infrastructure amid the armed conflict between two rival governments
claiming to run Libya. JBC Energy estimates that the Libyan oil output has fallen to as low as 150,000
barrels a day, down from almost 900,000 barrels in October.


In Iraq, one of the biggest Middle Eastern oil producers, bad weather has hit crude exports. As a
result, oil exports from the south of Iraq totaled 1.5 million barrels a day in the first 10 days of
February, which is 900,000 barrels a day lower than in January, and less than half of the
country’s target for this month, Commerzbank said in a note.


In the U.S., traders remained focused on a growing glut of oil. Stockpiles have risen for five
straight weeks to a record high of 417.9 million barrels as of Feb. 6, according to weekly data
from the U.S. Energy Information Administration dating back to 1982.


In Cushing, Okla., a key storage hub and the delivery point for the Nymex contract, supplies
have climbed for 10 straight weeks.


“The U.S. is absorbing the bulk of the surplus,” said Christopher Main, analyst at Citigroup Inc.
“All the crude has basically wound up in the U.S. market.”


Demand for U.S. crude typically falls in the early spring as refiners shut units for seasonal
maintenance.


The Nymex crude-oil options contracts for March expired at settlement Tuesday, adding further
volatility to the day’s price moves as traders closed out positions, analysts said.


Gasoline futures fell 3.61 cents, or 2.2%, to $1.5901 a gallon. Diesel futures gained 0.60 cent, or
0.3%, to $1.9774 a gallon, the highest settlement since Dec. 23.


Write to Nicole Friedman at nicole.friedman@wsj.com and Georgi Kantchev at
georgi.kantchev@wsj.com


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND
MAY NOT BE SUITABLE FOR EVERYONE. OPTIONS, CASH AND FUTURES
MARKETS ARE SEPARATE AND DISTINCT AND DO NOT NECESSARILY
RESPOND IN THE SAME WAY TO SIMILAR MARKETS STIMULUS. A MOVEMENT
IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE
RELATED FUTURES & OPTIONS CONTRACT BEING OFFERED. SEASONAL
DEMAND AND CURRENT NEWS IN COMMODITIES ARE ALREADY REFLECTED
IN THE PRICE OF THE UNDERLYING FUTURES.