Oil prices fell Wednesday, weighed down by concerns about rising production from Libya feeding into an oversupplied market and a surprise increase in U.S. gasoline inventories.
Benchmark Brent crude futures LCOc1 were down 27 cents at $51.60 a barrel at 0950 GMT.
U.S. West Texas Intermediate crude futures CLc1 were trading at $47.67, down 16 cents.
Production from Libya’s Sharara oilfield, the conflict-riven country’s largest, has been seesawing. The field remained shut on Wednesday, two Libyan oil sources told Reuters. The field had restarted at least once on Tuesday amid conflicting reports about whether it had reopened.
“(The) flood of news reports makes it clear that the situation in Libya is still chaotic and that conditions in the country are still far from normal,” Commerzbank analysts wrote.
Sharara recently reached an output of 280,000 barrels per day (bpd), but closed this week due to a pipeline blockade. Its production is key to Libya’s oil output, which surged above 1 million bpd in late June, about four times its level last summer.
Libya’s rising output is a headache for the Organization of the Petroleum Exporting Countries, which together with non-OPEC producers including Russia has pledged to cut around 1.8 million bpd of supplies between January this year and March 2018 in an attempt to remove a global glut.
Additionally, industry data released by the American Petroleum Institute showed on Tuesday that U.S. gasoline stocks rose by 1.4 million barrels in the week to Aug. 18, compared with analysts’ expectations of a 3.5-million-barrel drop. [API/S]
Jeffrey Halley, a senior market analyst at futures brokerage OANDA, said rising U.S. gasoline inventories were “not a good sign during the U.S. summer driving season”.
Official inventory data from the U.S. Energy Information Administration is due later on Wednesday.
Frontpage December 6, 2018