Oil prices fall as US inventories and Libya’s production ramp up

Smoke is released into the sky at a refinery in Wilmington, California March 24, 2012. Picture taken March 24, 2012. REUTERS/Bret Hartman

Reuters – Oil prices slipped in tepid Asian trading on Thursday, dragged down by an unexpected rise in U.S. crude inventories last week and moves by Libya to boost output over the next few months.

But the fall was curbed by a weaker dollar and optimism that crude producers would abide by an agreement to limit output to prop up markets.

Libya’s National Oil Corporation (NOC) said it hoped to add 270,000 barrels per day (bpd) to national production after it confirmed on Tuesday that pipelines leading from the Sharara and El Feel fields had reopened. NOC said that Sharara output reached 58,000 bpd on Wednesday.

Libya recently doubled output to 600,000 bpd, but Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance, said the country had the capacity to ramp up production to 1.2 million bpd.

But optimism that oil producers would stick to an agreement made earlier this month to cut output by almost 1.8 million bpd from Jan.

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