Oil edges lower as Libyan output undermines 2018 rally

Oil slipped on Monday under pressure from rising Libyan output and concerns that a rally that had sent prices to their highest since December 2014 had run out of steam.
 
But losses were limited by comments from top exporter Saudi Arabia that Organization of the Petroleum Exporting Countries (Opec) and other producers would continue to cooperate on their oil cuts beyond 2018 and prices also found some support from strong economic growth that underpinned demand.
 
Brent crude slipped 7 cents to $68.54 a barrel at 1215 GMT, reversing course after earlier modest gains. Brent had hit $70.37 on Jan. 15, the highest since December 2014.

 

US crude slipped 3 cents to $63.34, having also hit its highest since December 2014 last week.  PVM analyst Tamas Varga said resumption of output from Libya’s As-Sarah was “serving as a brake on the rally”. “The downside might be limited but last week’s highs are unlikely to be penetrated unless there is a significant bullish change on the supply front,” he said in a report.  Production at As-Sarah resumed on Sunday and was expected to add 55,000 barrels per day (bpd) by Monday. Brent is particularly sensitive to changes in output from Libya, as most Libyan crude is priced against Brent.

 
Saudi Arabia said on Sunday the Opec and its allies had agreed to continue cooperating on production after their deal on supply cuts expires at the end of 2018. The deal began in January 2017.
 
Saudi Energy Minister Khalid al-Falih said rebalancing the market might not take place until 2019, suggesting it would take longer than Opec has previously indicated.