Oil prices dipped on Wednesday, as a rally ran out of momentum a session after crude hit a near 2-1/2-year high on supply outages in Libya and the North Sea.
Continue Reading Below
Brent crude futures settled at $66.44 a barrel, down 0.9 percent, or 58 cents. U.S. West Texas Intermediate (WTI) crude futures settled at $59.64 a barrel, down 33 cents, or 0.6 percent.
The previous day, Brent broke through $67 for the first time since June 2015 and WTI rose above $60 a barrel for the first time since May 2015.
"The market continues to gravitate towards bullish news but today we are seeing a little bit of profit-taking," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
Prices briefly pared losses in post-settlement trade after industry group American Petroleum Institute said U.S. crude stocks fell more than expected last week.
On Tuesday, Libya lost around 90,000 barrels per day (bpd) of crude oil supplies after a pipeline feeding Es Sider port was blown up. Repairs could take a week but will not have a major impact on exports, the head of Libyan state oil firm NOC told Reuters on Wednesday.
RBC Capital Markets analyst Helima Croft said in a note to clients that political unrest ahead of national elections could further dent Libyan production in the coming months.
Other supply disruptions of recent weeks included closure of Britain's largest Forties pipeline. On Wednesday, Forties was pumping at half its normal capacity. Its operator was pledging to resume full flows in early January.
The Forties and Libyan outages together amount to around 500,000 bpd, relatively small in a global market of about 100 million bpd.
"While supply impact is immaterial, it shows that with the market structurally undersupplied and inventories continuing to draw, geopolitical risk has now re-emerged as an important factor in day-to-day trading dynamics," analysts at Tudor Pickering Holt Energy Research said in a note.
Oil markets have tightened due to supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC Russia. Data from the U.S. Energy Information Administration (EIA) shows global oil markets gradually came into balance by 2016 and started to show a slight supply deficit this year.
The data implied a shortfall of 180,000 bpd for the first quarter of 2018.
Limiting OPEC and Russian efforts to prop up prices, U.S. oil production
The EIA is due to publish the latest U.S. production figures on Thursday.
(Reporting by Devika Krishna Kumar in New York, Henning Gloystein in Singapore and Dmitry Zhdannikov in London; Editing by Andrew Hay, Chizu Nomiyama and David Gregorio)