The oil refinery in Mongstad, Norway. Picture REUTERS/GWLADYS FOUCHE
The oil refinery in Mongstad, Norway. Picture REUTERS/GWLADYS FOUCHE

Singapore — Oil prices on Tuesday clawed back some of their losses from the previous day as Libya’s National Oil Company (NOC) declared force majeure on exports from the El Sharara oilfield, which was seized at the weekend by a local militia group.

Despite that, overall sentiment on oil prices remained weak amid worry over global stock markets and doubts that planned supply cuts led by producer cartel Opec will be enough to rein in oversupply.

International Brent crude oil futures were at $60.30 a barrel at 2.06am GMT, up 33c, or 0.6%, from their last close.

US West Texas Intermediate (WTI) crude futures were at $51.19 a barrel, up 19c, or 0.4%, from their last settlement.

Libya’s NOC late on Monday declared force majeure on exports from the El Sharara oilfield, the country’s biggest, which was seized at the weekend by a militia group.

NOC said the shutdown would result in a production loss of 315,000 barrels a day (bbl/day), and an additional loss of 73,000 bbl/day at the El Feel oilfield.

The rise came after crude prices dropped by 3% the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by Opec and some non-Opec producers including Russia.

Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.

In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia

“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

“The general risk-off tone in global markets and the stronger dollar … are contributing to the selling pressure.”

The Opec-led group of oil producers last Friday announced a supply cut of 1.2-million barrels a day in crude oil supply from January, measured against October 2018 output levels.

Reuters