PKONWEB Report (New York) –Oil fell towards $65 a barrel on Tuesday, pressured by the restart of Libya’s biggest oilfield and on expectations for an increase in US crude inventories.
Some wells at Libya’s El Sharara oilfield have restarted and the aim is to reach initial output of 80,000 barrels per day (bpd), a field engineer said on Tuesday. The field had been closed since December, when state guards and tribesmen seized it.
The closure of the field in southern part of Libya caused a production loss of $1.8 billion as a result of a stalemate between NOC and eastern military forces, the Libyan National Army (LNA), led by Khalifa Haftar, which had taken control of the field three weeks ago as part of a southern offensive.
“The main development has been the restart of El Sharara,” said Olivier Jakob, analyst at Petromatrix. “It’s a new input which is on the bearish side.”
Oil also slipped on forecasts that the latest round of US inventory reports will show rising crude stockpiles. Six analysts polled by Reuters estimated, on average, that crude stocks rose 400,000 barrels in the week to March 1.
Also, concern about a slowdown in oil demand growth, especially in Europe and Asia, has weighed on prices. Still, Brent has risen 20% this year due to supply curbs led by the Organization of the Petroleum Exporting Countries (OPEC).
China’s government said it was targeting economic growth of 6-6.5% in 2019, less than 6.6% growth reported last year. That raises the prospect of slowing fuel demand in the world’s second-largest consumer.
“There are plenty of signs that the global economy is slowing – weak car sales and manufacturing data from China, flat growth in Europe and a slowing GDP rate in the fourth quarter for the US,” said Matt Stanley, a broker at Starfuels, Dubai.
To prop up the market, OPEC and its allies, an alliance known as OPEC+, have been cutting output by 1.2 million bpd since the start of the year.
The actual cut has exceeded the pledged amount because of US sanctions on Iran and Venezuela, plus unrest in Libya that had prompted the closure of El Sharara, giving additional tailwind to prices.
Crude oil prices had increased throughout January and into February as global oil supplies declined relatively quickly. The agreement among members of the OPEC and other non-OPEC producers to reduce production began in January.
(With input from Agencies)