27 April 2017, London — Oil prices fell on Thursday after news that two key oilfields in Libya had restarted, pumping crude for export into an already bloated market.
Benchmark Brent crude LCOc1 fell $1.22 a barrel to a low of $50.60 before recovering slightly to around $50.80 by 1330 GMT. The contract has fallen more than 10 percent from this month’s peak.
U.S. light crude oil CLc1 hit a low of $48.51, down $1.11 a barrel on the day.
Libya’s Sharara oilfield, with a production capacity of almost 300,000 barrels per day (b/d), has restarted after the end of protests that had blocked pipelines there, a Libyan oil source and a local official said on Thursday.
The source said El Feel oilfield, with a capacity of about 90,000 b/d, had also restarted.
The news helped push Brent down through its 200-day moving average (MA) at $51.29 a barrel, a key technical support on price charts, which triggered further selling, analysts said.
“Prices have come under pressure on news from Libya … and quite importantly a break below the 200-day MA,” Eugen Weinberg, head of global commodities research at Germany’s Commerzbank in Frankfurt, told Reuters Global Oil Forum.
“I would not be surprised to see Brent prices testing $50 today or tomorrow,” Weinberg added.
The oil market has found some support from plans by major exporters to extend output cuts.
The Organization of the Petroleum Exporting Countries and Russia have agreed to cut output by 1.8 million b/d in the first half of the year to tighten the market and prop up prices.
OPEC Secretary-General Mohammad Barkindo said on Thursday that a global oil overhang was declining, but he added that stocks remained high and needed to fall further.
OPEC is discussing extending its cuts into the second half of the year, but the group has an uphill task.
U.S. data on Wednesday showed a drop in crude stocks, but gasoline inventories surged as refiners produced more fuel than the market could consume.
“U.S. commercial stocks increased by more than 6.5 million barrels last week,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates. “Stock rebalancing has been put on hold as U.S. commercial oil inventories have jumped.”
U.S. crude oil production C-OUT-T-EIA is also rising, up 10 percent since mid-2016 at 9.27 million b/d.
*Christopher Johnson, Henning Gloystein; Editing: David Goodman & Dale Hudson – Reuters