U.S. West Texas Intermediate and international-benchmark Brent crude oil inched lower early Monday on extremely low volatility and volume. Helping to cap the market and encourage the light selling pressure are reports of a recovery in production at Libya’s largest oil fields.
At 0600 GMT, September West Texas Intermediate crude oil is trading $49.25, down $0.13 or -0.26%. October Brent crude oil is at $52.19, down $0.18 or -0.34%.
The extremely low volume and volatility may be a result of the joint OPEC and non-OPEC technical committee currently taking place in Abu Dhabi. The meeting, which ends today, was called to discuss ways to boost compliance with the deal reached in May to reduce production by 1.8 million barrels per day.
The key factors currently holding prices in a range are production in Libya, OPEC output concerns and U.S. production.
Early Tuesday, it was reported by the National Oil Corporation that production from Libya’s Sharara field was returning to normal after a brief disruption when armed protesters broke into a control room in the coastal city of Zawiya.
According to recent data, the field has been producing about 270,000 barrels a day (bpd), accounting for about a quarter of the country’s output, which climbed to more than 1 million bpd in late June from just over 200,000 bpd a year ago.
In other news, helping to limit gains is the report from last week which showed OPEC output hit a 2017 high in July and its exports hit a record.
Helping to perhaps underpin the market is trader reaction to the weekly report from Baker Hughes that showed a cut of one drilling rig in the week to August 4.
Since market participants aren’t sure what to expect from the meeting in Abu Dhabi, traders are reluctant to commit to either side of the market at this time. Therefore, we’re likely to continue to sit in a range until the release of the American Petroleum Institute weekly inventories report late in the session.
Going into the meeting, bullish investors were hoping the participants would agree to production limits for Nigeria and Libya. However, given the uncertainty in Libya, they may walk away from the meeting without any major changes agreed upon.
The current WTI chart pattern suggests that if support at $48.52 fails, prices could plunge to $47.92 to $47.32.
This article was originally posted on FX Empire