Oil rally runs out of steam

singapore/london — Oil prices fell on Wednesday after hitting a near two-and-a-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 $66.26 a barrel, down 1.15 per cent, or 76 cents, at 1047 GMT after breaking through $67 for the first time since May 2015 the previous day.

US West Texas Intermediate (WTI) crude futures were at $59.57 a barrel, down 40 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.

That added to supply disruptions of recent weeks, which also included the closure of Britain’s largest Forties pipeline. On Tuesday, its operator said it expected full flows along the Forties link to resume in early January.

The Forties and Libyan outages, which together amount to around 500,000 bpd, are relatively small in a global context of both production and demand approaching 100 million bpd. — Reuters