Oil prices drop as Libya reportedly increases production

  • Oil prices drop as Libya reportedly increases production

Oil prices drop as Libya reportedly increases production

U.S. West Texas Intermediate crude CLc1 fell $1.34, or 2.7 percent, to settle at $48.32 per barrel, its lowest close since May 12.Brent's premium over the same U.S. month WTCLc1-LCOc1 narrowed to its lowest in nearly five weeks.For the month of May, Brent fell nearly 3 percent, its fifth straight monthly loss.

The cutbacks have yet to drain crude inventories significantly, Reuters added.

The U.S. Energy Information Administration (EIA) was due to report its official figures for U.S. stockpiles at 1500 GMT on Thursday and investors were waiting to see if the API figures were confirmed. That compared with analyst expectations for a decrease of 2.5 million barrels.

On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.9% at $47.44 a barrel.

"In terms of heavy crude, we have heavily relied on Middle East because it's been the most economical crude and we buy all types of crude oil from Russia, Africa, Europe and USA, if they become economical", Song said.

The global oil market reacted Wednesday to the news that Libya, one of the major oil producers in the Organization of Petroleum Exporting Countries (OPEC), was increasing its crude output to 827,000 barrels per day.

Rystad predicts us oil production to come roaring back, hitting 9.4 million barrels a day in May.

Oilfield services firm Baker Hughes on Friday reported its weekly count of oil rigs rose for a 20th straight week. After languishing way below the corresponding 2016 levels since the start of 2017, U.S. gasoline demand jumped 252,000 b/d week-on-week to May 19, hitting 9.704 million b/d, the highest for that time of the year in five years.

"From the point of view of OPEC, if they want to stabilise or increase the price they would have to extend of deepen the cuts". "We do expect prices eventually to gain some upwards momentum because of excess demand, but in the short term market sentiment remains bearish", the bank said.

The U.S. withdrawal from the landmark 2015 global agreement to fight climate change drew condemnation from Washington's allies - and sparked fears that U.S. oil production could expand even more rapidly.

OPEC shipped an average of 26.4 million bpd in the last three months of 2016.

Libya's rising production and exports add to soaring USA output, which is largely because of a more than 10 percent jump in shale oil drilling since the middle of a year ago to more than 9.3 million bpd, close to top producers Saudi Arabia and Russian Federation.

Rising output from OPEC members Nigeria and Libya, which are exempt from the deal, is also undercutting the attempt to limit production. "A scenario that would not be favourable to oil prices".

"Growing demand will be the main factor draining the global oil surplus, but generally at a slower pace than perceived", said Norbert Ruecker, head of macro and commodity research at Julius Baer.