Ejiofor Alike with agency reports
Oil prices fell more than one per cent on Tuesday amid signs of a resurgence in Libyaâ€™s output and on concerns that extended production cuts by the worldâ€™s top exporters may not be enough to drain a global glut that has depressed prices for almost three years.
Global benchmark, Brent crude fell 87 cents, or 1.7 per cent, to $51.42 a barrel, while US light crude was 59 cents, or 1.2 per cent, lower at $49.21.
Reuters reported that Libyaâ€™s oil production was at 784,000 barrels per day (bpd) because of a technical issue at the Sharara field, but was expected to start rising to 800,000 bpd yesterday, the chief of the state-run National Oil Corporation said.
OPEC and other oil producers, including Russia agreed last week to extend supply cuts by nine months, until the end of the first quarter of 2018.
Collective output by OPEC and other producers will be held around 1.8 million barrels per day (bpd) below its level at the end of last year.
But the cutbacks have yet to drain inventories significantly and prices fell sharply after the OPEC deal was announced.
Part of the problem for OPEC is oil supply in the United States, where shale production is booming.
US drillers have added rigs for 19 straight weeks to reach 722, the highest since April 2015, according to services firm Baker Hughes.
Some selling pressure yesterday also came from banks, traders and brokers said.
Goldman Sachs analysts have reduced their forecasts for oil prices, saying falling US production costs will keep supply rising for years to come.
The bank said that once OPECâ€™s production growth resumes after its self-imposed cuts, US and OPEC output would rise by one million to 1.3 million bpd between 2018 and 2020.
â€œWhile we are bullish on near-term prices as inventories normalise … 2018-19 futures need to be in the $45-$50 range,â€ Goldman reportedly said.
The American summer driving season, which by tradition started on the Memorial Day holiday on Monday, may offer some support for prices, Reuters quoted analysts as saying.
The American Automobile Association said ahead of Memorial Day that it expected 39.3 million Americans each to travel 50 miles (80 km) or more away from their homes over the Memorial Day weekend, the highest Memorial Day mileage since 2005.