Oil prices fall on U.S. inventory build; Libya output ramps up
* Libyan oil field resumes operations after pipeline reopens
* U.S. crude inventories rise unexpectedly last week -EIA
* SocGen (Paris: FR0000130809 - news) expects 2017 oil prices in range of $50-60 per
barrel
* Despite planned output cuts, oil markets remain
well-supplied
(Adds closing prices)
By Scott DiSavino
NEW YORK, Dec (Shanghai: 600875.SS - news) 21 (Reuters) - Oil futures fell on Wednesday
after Libya said it expects to boost production over the next
few months and a report showing a surprise build in U.S. crude
inventories last week.
Brent futures for February delivery fell 89 cents,
or 1.6 percent, to settle at $54.46 a barrel, while U.S. West
Texas Intermediate crude for February lost 81 cents, or
1.5 percent, to $52.49 per barrel.
Even (Taiwan OTC: 6436.TWO - news) though WTI futures for February were down, the U.S.
front-month gained about 0.5 percent due to the contract
roll from lower-priced January to the higher-priced February on
Tuesday and closed at its highest level in over a week.
"The big news of the day is that it looks like we're going
to get more crude out of Libya," said James Williams, president
of energy consultant WTRG Economics in Arkansas.
Libya's National Oil Corporation (NOC) confirmed on Tuesday
that pipelines leading from Sharara and El Feel fields had
reopened, saying it hoped to add 270,000 barrels per day (bpd)
to national production over the next three months.
"The big question is what will OPEC do about the Libyan
increase. With Libya excluded from the production cut agreement,
I anticipate the Saudis will unilaterally balance the Libyan
crude," WTRG's Williams said.
On Nov. 30, OPEC agreed to cut output by 1.2 million bpd for
six months from Jan. 1, with top exporter Saudi Arabia cutting
around 486,000 bpd. On Dec. 10, non-OPEC countries including
Russia agreed to reduce output by 558,000 bpd, the largest-ever
contribution by non-OPEC producers.
In the United States, U.S. crude stocks rose by 2.3 million
barrels in the week to Dec. 16 even as refineries hiked output,
while gasoline stocks and distillate inventories fell, the U.S.
Energy Information Administration said.
That was the first weekly build in crude stockpiles in five
weeks. Analysts were expecting U.S. crude inventories to fall by
2.5 million barrels, according to a Reuters poll.
The EIA report diverged widely from the American Petroleum
Institute industry group's data released late Tuesday, which
showed a larger-than-expected 4.1-million-barrel crude draw.
Oil markets are expected to remain well-supplied despite the
planned OPEC and non-OPEC reductions.
Russia's 2016 oil output is expected to total 547.5 million
tonnes (11 million barrels per day), a 2.5 percent increase from
last year, Energy Minister Alexander Novak told reporters late
on Tuesday.
(Additional reporting by Amanda Cooper in London and Henning
Gloystein in Singapore; Editing by Chizu Nomiyama and Andrea
Ricci)