By Ovunc Kutlu
ANKARA
Oil prices continued their steep decline Tuesday as a fire in Libya's largest oil export terminal was put out and traders began offloading their supplies.
"Traders were holding crude or may have bought other supplies in anticipation of the Libyan export oil terminal going offline for an extended period of time," Ed Hirs, an energy economist at the University of Houston in the U.S, said.
"But now traders know that Libya may be able to fulfill its contracts to deliver crude and that maybe the reason to offload other supplies," Hirs added.
The sharp decline in oil prices Monday came after a fire was put out at four out of the seven oil storage facilities in Libya's largest oil exporting terminal, Es Sider.
Brent crude oil price fell below $58 per barrel Monday, and continued to fall Tuesday morning, reaching as low as $56.51 per barrel, its lowest level since May 2009.
Meanwhile, the American benchmark for oil prices, West Texas Intermediate or the WTI, fell below the $53 per barrel mark.
"Libya may be able to restore deliveries sooner than the market expects," Hirs said, adding that refinery managers might no longer purchase additional supplies.
"Even though the fire has been put out, no one knows when it will be put back into full service," he added.
Es Sider and Ras Lanuf oil terminals in eastern Libya export about 350,000 barrels per day, which account for more than half of Libya’s oil exports.
Oil prices gained by almost three percent on Dec.15 when two oil exporting terminals shut down because of internal strife.
Libya exported 735,000 barrels per day in 2013, according to the U.S. Energy Information Administration.
Oil production in Libya is one of the reasons for glut of oil in the markets, which increased global supply. Oversupply, low global demand, slow growth rate of Asian and European economies, and increasing value of the U.S. dollar, which is indexed to oil prices, that hinder the purchasing power of oil-importing countries are major factors behind the falling oil prices in the last six months.
In addition, the decision of the Organization of Petroleum Exporting Countries to not cut production until next June further caused prices to drop.
The price of Brent crude oil has fallen more than 50 percent since June when it was $115 per barrel.
www.aa.com.tr/en
