Oil prices dip on U.S.
stocks rise, Libya output boost
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[December 22, 2016]
By Dmitry Zhdannikov and Keith Wallis
LONDON/SINGAPORE
(Reuters) - Oil prices slipped in tepid trading on Thursday, pressured
by an unexpected rise in U.S. crude inventories last week and moves by
Libya to boost output over the next few months.
The decline was curbed by a weaker dollar and optimism that crude
producers would abide by an agreement to limit output to prop up prices.
Brent futures <LCOc1> for February delivery fell by 20 cents to $54.26 a
barrel by 1200 GMT, having finished 89 cents lower on Wednesday. U.S.
West Texas Intermediate crude <CLc1> dropped 19 cents to $52.30 a
barrel.
The dollar index <.DXY>, which tracks the greenback against a basket of
six currencies, slipped by 0.09 percent as investors took profits after
its rise to a 14-year peak earlier this week.
A weaker dollar makes greenback-denominated commodities including oil
cheaper for holders of other currencies.
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U.S. crude stocks posted a surprise build last week, climbing by 2.3
million barrels compared with an expected decline of 2.5 million
barrels, the U.S. Energy Information Administration said on Wednesday.
Libya's National Oil Corporation (NOC) said it hoped to add 270,000
barrels per day (bpd) to national production after it confirmed on
Tuesday that pipelines leading from the Sharara and El Feel fields had
reopened. NOC said that Sharara output reached 58,000 bpd on Wednesday.
"Short-haul crude oil supplies to Europe are increasing with the restart
of Libya and that will provide a cap for European crude oil strength,"
Olivier Jakob, managing director of PetroMatrix consultancy, said.
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A motorist holds a fuel pump at a Gulf petrol station in London
April 18, 2006. REUTERS/Luke MacGregor/File Photo
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Libya
recently doubled output to 600,000 bpd, and Jonathan Barratt, chief investment
officer at Sydney's Ayers Alliance, said the country had the capacity to ramp up
production further, to as much as 1.2 million bpd.
But optimism that oil producers would stick to an agreement made earlier this
month to cut output by almost 1.8 million bpd from Jan. 1 reined in the drop in
prices.
"It is a safe assumption particularly in the early stages that OPEC and non-OPEC
producers will abide by the agreement to curb output," said Ric Spooner, chief
market analyst at CMC Markets in Sydney.
"If you look at where the biggest production cuts are coming from, it's largely
about the Gulf states and Russia – this gives me even more comfort there will be
material compliance," he said.
(Editing by Christian Schmollinger and Susan Thomas)
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