On Wednesday, oil prices fell after hitting a near two-and-a-half year high in the previous session as analysts said all good things must come to an end regardless of the supply outage in Libya and the North Sea.
Brent crude futures fell to $66.27 a barrel, a drop of 1.15 percent, at 1321 GMT after surpassing $67 for the first time since 2015 in the last session. U.S. West Texas Intermediate (WTI) crude futures were at $59.53 a barrel, down 44 cents from the previous session where it surpassed $60 a barrel for the first time since 2015.
Beginning Tuesday, Libya lost roughly 90,000 barrels per day (bpd) of crude oil supplies from an explosion to its pipeline supporting the Es Sider port. The Libyan outage added to the recent closure of Britain’s largest Forties pipeline. On Wednesday, Forties was pumping at half its typical capacity and its operator stated that it will resume full flows early into the new year. The Forties and Libyan outages total to roughly 500,000 bpd.
Oil markets have significantly strengthened this year due to the efforts of the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC producer Russia.
Data from the U.S. Energy Information Administration (EIA) revealed that after 2015’s widespread oversupply, the global oil markets progressively started to balance the following year and begun to indicate a slight supply shortage for 2017. EIA data suggests a minor supply shortage of 180,000 bpd for the first quarter of 2018.
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A major influence that is offsetting the efforts of the OPEC and Russia to support oil prices is the surge in U.S. oil production. Since mid-2016, U.S. production has increased over 16 percent and is nearing 10 million bpd. The most recent U.S. production figures are due to be announced on Thursday by the EIA.