London, UK | Oil prices fell Wednesday as rising output from Libya added to concerns about increasing US production that is undermining OPEC-led production cuts aimed at tightening the market.
Brent crude futures, the international benchmark for oil prices, were trading at $48.84 per barrel at 6 pm Beijing time, down $0.82 from their last close.
US West Texas Intermediate crude futures were at $49.34 per barrel, down 0.6 percent from their last settlement.
Traders said the price declines were a result of higher output in conflict-torn Libya, which was adding to a relentless rise in US production.
Libya’s oil production is expected to rise to 800,000 barrels per day (bpd) this week, state-run National Oil Corp said Monday.
That would likely boost its exports. Excluding pipeline exports, Libya shipped out an average of 500,000 bpd of crude oil so far in 2017, compared with just 300,000 bpd shipped on average in 2016, according to shipping data from Thomson Reuters Eikon.
Libya’s rising production and exports add to soaring US output, which is largely a result of shale oil drilling jumping by more than 10 percent since the middle of 2016. US output has grown to more than 9.3 million bpd, close to top producers Saudi Arabia and Russia.
“Libyan and shale oil production seems to have occupied the mind of traders overnight. That’s consistent with my sense that this is all about inventories and the associated supply overhang in crude oil markets at the moment,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Rising output from the US and Libya undermines efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia to tighten an oversupplied market by cutting production by around 1.8 million bpd until the end of the first quarter of 2018.