Oil prices fell on Tuesday as investors showed caution on the back of recent gains and prepared for US trading to resume after the Presidents’ Day holiday.
Analysts noted that investors have bought into oil markets speculatively in recent weeks on the back of hopes for a stronger recovery in the global economy.
Russian oil major Rosneft (MCX:ROSN) announced that it will receive a $14.12-billion line of credit from a group of international banks to help pay for its $55-billion acquisition of TNK-BP. It has now borrowed a total of $30 billion. A syndicate of banks including Bank of America Merrill Lynch and Citigroup has agreed to provide the financing following a similar deal in December.
By early afternoon on Tuesday, West Texas Intermediate crude for March delivery was up 13 cents, at $95.98 a barrel, in trading on the New York Mercantile Exchange. NYMEX floor trading was closed on Monday. Meanwhile, Brent crude was down 34 cents, at $117.02 a barrel, on the ICE Futures exchange in London.
A surge in crude production has pushed US output to the highest level since 1992, a development that many analysts feel could further reduce the nation’s reliance on the Organization of the Petroleum Exporting Countries (OPEC).
The world’s largest crude consumer has cut net petroleum imports from OPEC by 37 percent, from the January 2008 record of 6.371 million barrels a day, according to a report by Bloomberg.
“Increasing amounts of North American oil production puts pressure on OPEC to find other markets for their oil,” said Andy Lipow, president of Lipow Oil Associates. “It changes the political dynamics between the U.S. and OPEC.”
This proceeding is the first of at least two phases the court has set for the trial. The first phase will be focused on the causes of the Deepwater Horizon accident, as well as who should be held responsible and to what degree. Oil flow rates and the quantification of barrels of oil spilled will be addressed in the second phase, which is scheduled to begin in September 2013.
BP said it believes the government’s public estimate of 4.9 million barrels of oil released is at least 20 percent overstated.
New Brunswick Premier David Alward travelled to Montreal earlier this week in an attempt to convince Premier Pauline Marois that moving Alberta oil to the East Coast through Quebec would benefit all provinces.
Alward informed Marois about his most recent visit to Western Canada and was eager to discuss the provincial government’s support for a pipeline linking Alberta to New Brunswick. Marois responded that Quebec is not opposed to the initiative, but more in-depth analysis is needed.
“The Premier of New Brunswick spoke to me about a pipeline construction project today,” she said. “We agreed that more information and analysis is required to ensure that all technical, environmental, and economic issues related to this project respond to the interests of Quebecers. We have agreed to form a working group on this matter.”