Oil prices edged higher on Tuesday, driven by supply disruptions in Libya and expectations for a drop in U.S. crude stockpiles.
Light, sweet crude for September delivery settled up 27 cents, or 0.6%, to $47.64 a barrel on the New York Mercantile Exchange, reversing losses after trading as low as $47.20 earlier in the session. The September contract expired at settlement.
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The more actively traded October contract rose 30 cents, or 0.6%, to $47.83 a barrel. Brent, the global benchmark, rose 21 cents, or 0.4%, to $51.87 a barrel.
News that Libya's largest oil field shut down again on protests sparked a rally in oil prices Tuesday morning, market participants said. Rising production in Libya has been one cause for concern among oil bulls, since the country is exempt from a deal among major producers to curb output through March 2018.
"That is a key point in the upside movement this morning," said Tony Headrick, an analyst at CHS Hedging.
The Organization of the Petroleum Exporting Countries have struggled to fully adhere to planned production cuts in recent months, keeping oil prices subdued. Oil prices have risen three out of the past four sessions, but have been unable to break out of a tight trading range, as the prospects of higher production have weighed on market sentiment.
Prices jumped on the initial reports of disruptions to Libya's oil field but the gains subsided throughout the day Tuesday.
"Traders are still...a little negative as far as where we're going to be down the road," said Ric Navy, senior vice president for energy futures at RJ O'Brien & Associates LLC.
Traders will be closely watching for data from the U.S. Energy Information Administration on the amount of oil still in storage, due Wednesday morning. Declining U.S. stockpiles of crude oil have boosted hopes that the oversupplied market is moving back toward balance.
Analysts and traders surveyed by The Wall Street Journal expect U.S. oil inventories to have decreased by 3.1 million barrels on average in the week ended Aug. 18. Analysts also expect to see drops in gasoline and distillate stockpiles.
Still, some analysts have cautioned the steady decline in inventories could be in jeopardy after the busy summer driving season ends and the refinery maintenance period gets under way in autumn.
"With the U.S. summer driving season drawing to an end and refinery turnarounds fast approaching, there may be some unpleasant surprises in store for oil bulls," said Stephen Brennock, an analyst at oil brokerage PVM Oil Associates, in a report Tuesday morning.
Gasoline futures rose 0.4% to $1.5908 a gallon and diesel futures rose 1.3% to $1.5912 a gallon.
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(END) Dow Jones Newswires
August 22, 2017 16:50 ET (20:50 GMT)