Oil futures moved lower on Tuesday, after posting gains a day earlier, pressured by news that Libya has reopened its largest oil field and China lowered its economic growth forecast for the year.
West Texas Intermediate crude for April delivery CLJ9, +0.16% fell by 25 cents, or 0.4%, to $56.34 a barrel on the New York Mercantile Exchange, while May Brent LCOK9, +0.18% lost 10 cents, or 0.2%, to $65.57 a barrel ICE Europe.
News reports said that Libya has reopened the El Sharara oil field in Libya, which had been closed since December. Reuters said Libya’s National Oil Corporation expects to see a return to regular oil production from the oil field in the next few days.
“This will increase the oil production of Libya, and thus of OPEC, by more than 300,000 barrels per day. The oil market will then be slightly oversupplied again unless production is cut further or unscheduled outages occur elsewhere,” wrote analysts at Commerzbank, in a note.
Meanwhile, China cut its economic growth target for this year to between 6% and 6.5%. An economic slowdown could hurt demand for energy.
Still, “the downgrade of their forecast was followed by stimulus announcement that will help the domestic economy,” said Edward Moya, senior market analyst at OANDA. “Chinese tax cuts and, eventually, further monetary policy cuts will keep China attractive and should be supportive for commodity prices.”
Over in the U.S., however, production continues at record levels.
“All-time record production in the U.S. and elevated storage levels have forced the WTI curve into contango, implying the market in the U.S. is oversupplied,” said Robert Yawger, director for energy at Mizuho Securities, in a note. In contango, the futures price of a commodity trades above the spot price.
“Even the OPEC+-sensitive Brent contract is in contango in the front of the curve, implying there is no shortage of crude oil on the international market,” he said.
Oil rose Monday as members of the Organization of the Petroleum Exporting Countries and their allies continue to cut back on production levels, but trimmed gains as equities came under pressure.
In other energy trade, April gasoline RBJ9, +1.09% rose 0.2% to $1.753 a gallon, while April heating oil HOJ9, +0.09% shed 0.7% to $2 a gallon. April natural gas NGJ19, +0.42% was down 0.3% to $2.848 per million British thermal units.