Oil prices go down as supplies go higher from Libya, Nigeria

Sharara oilfield in Libya is one of the largest in the country. (Photo: Internet)

Oil prices edged down on Tuesday after OPEC reported an increase in its production for May despite a supply cut agreement and said the oil market was rebalancing more slowly than expected.

Benchmark Brent crude LCOc1 was 17 cents lower at $48.12 per barrel by 1236 GMT, reversing gains made earlier in the session when it edged up to $48.67. U.S. light crude CLc1 was at $45.86 per barrel, down 22 cents.

Prices initially nudged higher after the world’s top exporter Saudi Arabia outlined cuts to customers in July that included a reduction of 300,000 barrels per day (bpd) to Asia.

Riyadh is leading an effort by the Organization of the Petroleum Exporting Countries, Russia and other producers to cut output by almost 1.8 million bpd until March in a bid to curb oversupply and prop up prices.

But OPEC’s monthly report showed output from the group rose by 336,000 bpd in May to 32.14 million bpd, led by a recovery in Nigeria and Libya which are exempt from supply cuts. The report said the market was rebalancing at a “slower pace”.

“Crude oil is still struggling to rebound,” said Olivier Jakob, strategist at Petromatrix, adding that OPEC’s gradual approach to rebalancing was giving U.S. producers time to drill new wells that were undermining the impact of the group’s cuts.

(Source: Reuters)

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