Oil Prices Slide On Worries Libya Output Will Feed Glut
- Author: Zachary Reyes Jun 11, 2017,
Jun 11, 2017, 16:29
U.S. West Texas Intermediate crude CLc1 was down $1.30, or 2.6 percent, at $48.36 per barrel, after falling as low as $47.73.
Meanwhile, all eyes will be glued to Thursday's U.S. Energy Information Administration report on stockpile futures. Analysts polled by Reuters expected U.S. stocks to have fallen by 2.8 million barrels last week, their eighth straight weekly decline. Shipping data in Thomson Reuters Eikon shows that, excluding pipeline exports, Libya shipped out an average of 500,000 barrels a day of crude oil so far this year, compared with just 300,000 barrels a day shipped on average in 2016.
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.
"As these numbers are getting confirmed, the initial optimism about OPEC's temporary cuts, may turn to increasing skepticism about OPEC's choice of policy once the current output deal expires next year", Tonhaugen said.
There were underlying concerns surrounding increased supplies from Nigeria and Libya given with no immediate move by OPEC to bring these two producers into the production agreement and cap output.
However, U.S. crude production is rising fast as new technology helps to extract shale oil, making the United States more self-sufficient in energy.
U.S. shale production requires a higher price to be profitable.The agreement proved to be partially successful, as it managed to keep the prices oil prices above $50 per barrel, giving a fiscal boost to major producers.More than 400 oil rigs are now working United States shale fields - an increase of more than 120 per cent compared with a year ago.
"Prices are likely to remain weak until there is any noticeable reduction in oil stocks", Commerzbank analysts said.
Though a member of the OPEC, Libya is exempt from the production cuts.
USA gasoline demand over the past four weeks was 0.7 percent lower year-on-year at 9.6 million bpd.
President Donald Trump has vowed to provide extra support for U.S.