Oil Market Update (March 12, 2013)

The price of oil fell on Monday after higher-than-expected jobs growth in the US sparked speculation about an earlier end to the Federal Reserve’s loose monetary policy. The US government said employers added 236,000 jobs in February.

While the improved results bode well for economic growth, analysts believe they could also signal an earlier end to the Federal Reserve’s bond-buying program, which has been instrumental in propping up the US economy since 2008.

In February, Saudi Arabia increased its crude production to 9.15 million barrels a day, an increase of 100,000 barrels a day from the previous month, an official with knowledge of the country’s oil policy told Bloomberg. The official did not want to be identified because the information is reportedly confidential.

Crude delivered from storage caused an excess of supply over production of 10,000 barrels a day in February, the official also said. The increase in output followed January’s decline in production to the lowest level since May 2011.

By early afternoon on Monday, West Texas Intermediate crude for April delivery was down 44 cents, at $91.60 a barrel, in trading on the New York Mercantile Exchange. Meanwhile, Brent crude was down 74 cents, at $110.13 a barrel, on the ICE Futures exchange in London.

Norway’s oil wealth fund’s value rose 13.4 percent in 2012, following a loss of 2.6 percent in 2011. The fund is now estimated to be worth $670 billion, making it 40 percent larger than the entire Norwegian economy, according to the BBC.

“The fund’s performance reflects development in global financial markets during 2012,” said the fund’s CEO, Yngve Slyngstad. Norway’s sovereign wealth fund is one of the largest investors in the world and is managed by the country’s central government.

The UK offshore safety regulator has given oil and gas giant Total (NYSE:TOT) the green light to resume operations at its Elgin-Franklin field complex following a leak that has kept it offline for almost a year.

The Health and Safety Executive said it has accepted Total’s revised safety case for the field and that it is now up to the company to decide when to resume operations. Upstream reported that Total is looking to restart production as soon as it is “safe and practical” to do so; it hopes that will be within the “next few days.”

On a different note, offshore oil exploration will be allowed off the Bahamas and a voter referendum on whether to go forward with full production will be held after it is determined whether the island chain has commercially viable reserves.

The exploratory drilling will not likely produce enough information to make a decision until late 2014 and the referendum could potentially be held in 2015, said Kenred Dorsett, the Bahamas’ minister of environment and housing.

Dorsett said that the government will seek new regulations to protect the environment and that it cannot ignore the potential economic benefits of oil for a country that now imports fuel.

“The discovery of oil in the Bahamas would almost certainly prove to be economically transformative for our nation for many generations to come,” he said in a statement.