Oil falls from 2015 highs as rally runs out of steam

Oil prices fell on Wednesday after hitting a near two-anda-half-year high in the previous session as analysts said the rally was gradually running out of steam despite supply outages in Libya and the North Sea.

Brent crude futures dropped to $66.27 a barrel, down 1.15 per cent, or 75 cents, at 1321 GMT after breaking through $67 for the first time since May 2015 the previous day. US West Texas Intermediate ( WTI) crude futures were at $59.53 a barrel, down 44 cents from their last settlement. WTI broke through $60 a barrel for the first time since June 2015 in the previous session.

"This could now be the fourth year in a row when the period around the turn of the year offers a good opportunity to start fading the market," JBC Energy said in a note.

JBC said it believed the market will gradually realise it had overshot: "We would have to argue that sometime over the course of January we will see a major turnaround." It said prices could fall below $60 a barrel sometime in February and could even test $55 a barrel.

On Tuesday, Libya lost around 90,000 barrels per day (bpd) of crude oil supplies from a blast on a pipeline feeding Es Sider port.

Repair of the pipeline could take about one week but will not have a major impact on exports, the head of Libyan state oil firm NOC told Reuters on Wednesday.

The Libyan outage added to supply disruptions of recent weeks, which also included the closure of Britain's largest Forties pipeline.

On Wednesday, Forties was pumping at half its normal capacity and its operator was pledging to resume full flows in early January.