Oil prices under pressure as Libyan production recovery weighs

Oil prices were under pressure on Monday as a rebound in Libyan oil output at the weekend weighed against upbeat economic data from Asia that pointed to strong energy demand from the region.
Benchmark Brent futures eased by 8 cents to $53.45 a barrel by 1356 GMT. US West Texas Intermediate crude futures were down 10 cents at $50.50 a barrel.
Libya’s Sharara oil field, the country’s largest, resumed production on Sunday after a week-long disruption. State-owned NOC lifted force majeure on loadings of Sharara crude on Monday, sources told Reuters.
The field was producing around 120,000 barrels per day (bpd) on Monday and about 220,000 bpd prior to the March 27 shutdown.
“The main development over the weekend is the restart of Sharara,” managing director of PetroMatrix Olivier Jakob said.
Uncertainty about how Libyan output would fare in the months ahead added short-term volatility to oil prices, he said. “(It) is a swing factor that can make it move both ways if one looks at the balances for the second half of the year.” he added.
Adding to pressure on prices, energy services firm Baker Hughes said the US rig count rose by 10 to 662 last week, making the first quarter the strongest for rig additions since mid-2011 and raising prospects for more US shale oil.
Rising supplies tempered data from Asia that suggested the region’s buoyant economy would ensure solid demand for energy.
Manufacturing data showed factories across much of Asia posted another month of solid growth in March.
Purchasing managers’ index (PMI) data from China showed its factories expanded for a ninth straight month in March, although the pace slipped as new export orders slowed.
“The China PMI figures were pretty positive. They provide background support for oil prices,” the chief market analyst at Sydney’s CMC Markets Spooner said.
Oil prices had rallied for three days last week, lifted by reduced Libyan output and helped by expectations that members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers such as Russia would extend production cuts beyond June.
But in a sign investors were more cautious about further price gains, hedge funds and money managers cut net long positions last week by 28,942 contracts to 372,756 lots in the week to March 28, the lowest since Nov. 29, data released by the InterContinental Exchange showed.

Source: Arab News