By Sarah McFarlane and Jenny W. Hsu
Oil prices were steady Friday, under pressure from potential production increases in Libya where operations have restarted at two key oil fields.
Brent crude, the global oil benchmark, edged down 0.2% to $53.91 a barrel on London's ICE Futures exchange, having hit their highest level since July 2015 earlier this week. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.3% at $50.73 a barrel.
Libya's oil production has dropped steeply in the past five years after the ousting of Moammar Gadhafi in 2011, but in recent months it has been ramping back up. Earlier this week Libyan officials saidthe restarting of the oil fields and a connected pipeline could bring back more than 200,000 barrels a day of oil within days.
This would diminish the impact of the recent production cuts agreed by the Organization of the Petroleum Exporting Countries, as well as nonmembers, totaling around 1.8 million barrels a day, or roughly 2% of the global supply. Libya was exempt from the cut.
"Now that the blockade of a key pipeline has been lifted, two oil fields there are set to go back into operation after production was suspended for a period of two years," said Commerzbank in a note. "The other countries will thus need to reduce their output even more."
The agreed cuts by oil producers are expected to be implemented from January.
"There will be little evidence of production cuts until mid to late January which we believe will be the next catalyst for the next large move in prices," Goldman Sachs said in a note.
The bankraised its Brent price forecast for the second half of 2017 to $58 a barrel, from its previous forecast of $51.50.
In the short term, the stronger dollar is also weighing on the market, which has rallied around 2% since the U.S. Federal Reserve raised interest rates Wednesday. A stronger dollar makes oil more expensive for traders using other currencies.
U.S. rate increases are usually bad news for oil. Demand for crude in emerging markets, a growth driver for global consumption, tends to fall when U.S. rates rise, according to an analysis by Bank of America Merrill Lynch.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.5% to $1.53 a gallon. ICE gas oil changed hands at $479.00 a metric ton, up $4.25. from the previous settlement.
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(END) Dow Jones Newswires
December 16, 2016 06:04 ET (11:04 GMT)
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