Oil prices at three-week low on increased Nigeria, Libyan output
Meanwhile, higher supply from Nigeria and Libya, which are exempt from a production-cutting deal, has fuelled concerns that the OPEC-led output cuts to reduce global inventories were being undermined by producers outside the deal.
Global benchmark, Brent was down $1.63, or 3.1 per cent, at $50.21 per barrel, after touching $50.12 per barrel earlier yesterday, the weakest since May 10, while U.S. light crude traded at $48.31, down $1.35, or 2.7 per cent.
Reuters reported that both contracts were on track for their third straight monthly loss.
OPEC and other producers, including Russia, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) until the end of March 2018.
But OPEC members – Libya and Nigeria – are exempt from the cuts, while U.S. shale oil producers that are not part of the agreement have been ramping up production.
Libya’s oil production has risen to 827,000 bpd, climbing above a three-year peak of 800,000 bpd reached earlier in May, the National Oil Corporation said, after a technical issue that hit the country’s Sharara oilfield was resolved.
Nigeria and Libya were exempted because their output had been curbed by conflict.
However, supplies from both nations staged a partial recovery in May, lifting overall OPEC output by 250,000 bpd to 32.22 million bpd.
The biggest increase came from Nigeria, where the Forcados production stream began loading cargoes for export.
The Forcados pipeline had been mostly shut, after it was bombed by militants in February 2016.
In Libya, the state oil firm said output had reached 827,000 bpd yesterday, around levels last seen in 2014.
But production is still half the 1.60 million bpd Libya pumped before the 2011 civil war.
While the exempt nations pumped more, those bound by output targets boosted compliance. Adherence by OPEC with the deal has been higher than in the past, reaching a record, according to the International Energy Agency (IEA).
Saudi Arabia and Russia said yesterday that cooperation between OPEC and non-OPEC producers would last beyond March.
“We want to institutionalise cooperation between OPEC and non-OPEC producers,” Saudi Energy Minister Khalid al-Falih said.