Oil prices fell to a three-week low on news that Libyan output was recovering from an oilfield technical issue. This fuelled concerns that the Organisation of Petroleum Exporting Countries (OPEC)-led output cuts to reduce global inventories were being undermined by producers outside the deal.

Benchmark Brent oil was down $1.63, or 3.1 per cent, at $50.21 a barrel after earlier touching $50.12 a barrel, the weakest since May 10. U.S. light crude traded at $48.31, down $1.35, or 2.7 per cent.

Both contracts were on track for their third straight monthly loss.

“Unless some bullish news stops this, prices will fall further in particular now with Brent trading below the post-OPEC low and approaching $50 a barrel,” said Carsten Fritsch, commodity analyst at Commerzbank.

OPEC and other producers, including Russia, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) until the end of March 2018.

“Traders covered short positions ahead of OPEC and some of these have now been re-established,” said Ole Hansen, head of commodities strategy at Saxo Bank.

OPEC members Libya and Nigeria are exempt from the cuts, while U.S. shale oil producers are not part of the agreement and have been ramping up production.

Libya’s oil production has risen to 827,000 bpd, climbing above a three-year peak of 800,000 bpd reached earlier in May, the National Oil Corporation said, after a technical issue that hitSharara oilfield was resolved.
Source: The Nation