Oil futures sank further on Tuesday (10 January) on news of war-torn Libya's crude production rising to a three-year high, throwing into doubt a strategy adopted by selected Opec and non-Opec producers of reducing output to support the oil price.
Libya, which was exempted from Opec's agreement to cut its members' production inked on 30 November 2016, has seen its production jump to 708,000 barrels per day (bpd); the highest on official records since 2014, the country's National Oil Company said. The production level was almost 8,000 bpd above market expatations.
The development clobbered the nascent price recovery in Asian trading, and sent oil futures back into negative territory again during late European and early US trading hours.
At 5:21pm GMT, the Brent front month futures contract was down 1.22% or 67 cents at $54.27 per barrel, while the West Texas Intermediate (WTI) was 1.02% or 53 cents lower at $51.43 per barrel.
Latest declines follow a near 3% drop for both benchmarks, after data, compiled by Baker Hughes, pointed to 665 operational rigs in the US, representing a rise of 7 rigs and the dataset's 10th successive weekly rise.
FXTM research analyst Lukman Otunuga said: "With fears over US shale exploiting the explosive 20% rebound in oil arousing bears in the medium term, extreme upside gains should be capped.
"The oil rally may be running out of steam with bulls desperately searching for opportunities to keep prices buoyed. With oil market sensitivity in the first quarter of 2017 still a dominant theme, severe weakness in oil prices should be expected if obstacles emerge from the proposed cut deal."
Meanwhile, Russia's announced production cut also failed to instil much market confidence. According to reports, Russia cut its oil output by 100,000 bpd in early January, but analysts at Vienna-based JBC Energy said: " It was not clear whether the lower volumes were related to announced cuts, weather (extremely cold temperatures were measured in Western Siberia), or other reasons."
Away from the oil market, precious metals remained in positive territory, albeit marginally. At 5:39pm GMT, the Comex gold futures contract for February delivery was up 0.08% or $1.07 at $1,183.90 an ounce, while spot gold was 0.18% or $2.11 higher at $1,183.21 an ounce.
Elsewhere in the precious metals sphere, Comex silver was up 0.82% or 14 cents to $16.82 an ounce, while spot platinum was up 0.03% or 25 cents to $977.35 an ounce.