Oil prices fell on Wednesday, extending the previous session’s drops, as investors continue to shrug aside the impact of almost all of Libya’s crude production being off-line amid plentiful supplies elsewhere, Reuters reported.
Brent crude LCOc1 was down 13 cents, or 0.2%, at $64.46 a barrel at 0119 GMT, after dropping 0.3% on Tuesday. U.S. oil CLc1 fell 16 cents, or 0.3%, to $58.22 a barrel, having declined 0.3% the day before.
Libya’s National Oil Corporation on Monday declared force majeure on the loading of oil from two major oil fields after the latest development in a long-running military conflict saw forces loyal to commander Khalifa Haftar ordering the shutdown of facilities in the east and south of the country.
“Market participants are already starting to fade this story – believing that this is a transitory outage,” said Helima Croft, global head of commodity strategy at RBC Capital Markets.
However, Croft warned that the “multi-year proxy war leaves Libyan production at high risk for extended outages and there are no indications that the country is close to turning the corner.”
Unless oil facilities quickly return to operation Libya’s oil output will be reduced from about 1.2 million barrels per day (bpd) to just 72,000 bpd.