Oil rally fizzles as prices made vulnerable by Libyan recovery

Bloomberg

Oil’s rally above $50 a barrel is running out of steam after Libyan production returns, bringing the focus back to OPEC. Futures in New York extended losses after dropping 0.7 percent on Monday, following a 5.5 percent jump last week. While OPEC output fell by 200,000 barrels a day in March, the decline was helped by cuts in Nigeria and Libya that are exempt from its production-curb deal to shrink a global glut, a Bloomberg News survey shows. Libya was said to resume pumping at its biggest field after about a week of disruption that had helped boost prices.
Oil’s climb last week, its most since December, was also aided after Kuwait and other producers from the Organization of Petroleum Exporting Countries joined with Oman to voice support for an extension of the six-month deal to reduce output that began in January. OPEC Secretary-General Mohammad Barkindo said Sunday that he is “cautiously optimistic that the market is already rebalancing,” even as data showed the number of active oil rigs in the US rose to the highest since September 2015.
“It seems that the stoppages in Libya appear to be shorter in nature, less protracted,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. “The faster it comes back, the effects in terms of price are less lasting. That leaves the oil market in the same sort of conundrum as it was before, which is, what is OPEC going to do?” The group will meet May 25 in Vienna to make a decision on whether to extend production cuts.