Libya pumping most oil in four years, prices slide sharply

Pipes are pictured at Libya’s El Sharara oilfield December 3, 2014. REUTERS/Ismail Zitouny

Oil slid further into a bear market as rising global supply countered efforts by OPEC and its allies to drain a glut, Bloomberg reported.

Futures fell as much as 1.1 percent in New York after front-month prices closed Tuesday more than 20 percent below their February peak. Libya, exempt from the OPEC-led output cuts, is pumping the most in four years while oil stored on tankers reached a 2017 high this month. U.S. crude inventories dropped by 2.72 million barrels last week, the American Petroleum Institute was said to report, according to Bloomberg.

Oil has returned to levels last seen before the Organization of Petroleum Exporting Countries and allies including Russia decided in November to cut production to drain a global glut. Relentless supply gains in the U.S. and renewed output from Libya are putting those efforts to boost prices in jeopardy. U.S. drillers have added rigs to fields for 22 weeks, the longest run in 30 years, according to Baker Hughes Inc, Bloomberg added.

“There is no bullish catalyst for oil to be seen at the moment and thus it is drifting lower,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “It will be hard for Saudi and Russia to keep cutting production in the face of a strong rise in U.S. crude production and output in Libya.” Bloomberg also said.

West Texas Intermediate for August delivery was at $43.43 a barrel on the New York Mercantile Exchange, down 8 cents, at 11:02 a.m. in London. Total volume traded was about 6 percent above the 100-day average. The July contract expired Tuesday after dropping 97 cents, or 2.2 percent, to $43.23, the lowest close since Sept. 16, according to Bloomberg.

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