Oil futures came under renewed pressure on Monday (4 April) on news of a rebound in production in war-torn Libya, which countered market chatter in favour of Opec extending its production cut by another six months from June.
Reuters reported that Libya's largest oilfield – Sharara – had resumed production on Sunday after a week-long disruption, with the country's state-owned oil company lifting its force majeure on the loading of crude.
The field was producing around 120,000 barrels per day (bpd) on Monday and about 220,000 bpd prior to the 27 March shutdown, the newswire added.
Meanwhile, oilfield services company Baker Hughes reported yet another rise in the number of operational oil and gas rigs in the US, up 374 on the same week last year to 824 rigs, pointing to a rise in US production.
The news countered market sentiment in favour of some form of price supportive action by Opec at its next meeting in Vienna on 25 May 2017, and positive economic data from Asia, thereby ending a rally going back three sessions that saw the West Texas Intermediate (WTI) bounce back above $50 per barrel.
At 5:45pm BST, the Brent front month futures contract was down 0.49% or 26 cents to $53.27 per barrel, while the WTI was down 0.47% or 24 cents to $50.36 per barrel, still holding firm above the $50 per barrel level.
Nonetheless, analysts believe Opec was sticking to its end of the bargain. Commentators at Vienna-based JBC Energy said their assessment of Opec's crude production in March is showing that compliance with the cartel's pledge to cut production has moved higher to 90%.
"That's the highest level we have seen since the start of the cuts. We estimate March production to have averaged 32.05m bpd, a decline of some 135,000 bpd compared to revised February figures. The 65,000 bpd downwards revisions for February came mainly on the back of lower production in Nigeria, Qatar, Iraq and the UAE which offset the upwards revision to output from Saudi Arabia."
Michael Wittner, global head of oil research at Société Générale said: "We continue to believe that Opec cuts will result in the rebalancing of the global oil markets in 2017, despite recovering US production, and assuming that Opec cuts are rolled over for the second half. The US weekly stats should soon start to provide evidence of rebalancing to the oil markets, probably by the end of April."
Away from the oil market, precious metals were on mixed turf. At 5:56pm BST, spot gold was trading up 0.24% or $2.95 to $1,252.15 an ounce, back above the psychological $1,250-level, while Comex gold for June delivery was up 0.27% or $3.40 to $1,254.60 an ounce.
Elsewhere, spot platinum was down 0.53% or $5.08 to $955.43 an ounce, while the Comex silver contract for May delivery was down 0.17% or 3 cents to $18.21 an ounce.