By Libby George
LONDON – Oil prices fell on Wednesday, pulled down by caution that rising U.S. crude output could scupper a rally that lasted for most of the third quarter.
U.S. West Texas Intermediate crude futures CLc1 were at $50.25 per barrel at 1114 GMT, down 17 cents from their last close. They fell below $50 earlier in the session.
Brent crude futures LCOc1 were down 24 cents at $55.76 a barrel. Earlier in the day, they fell as low as $55.38.
The drop came amid worries that a third-quarter rally that lifted Brent to mid-2015 highs by late September had been overdone. A resumption in output at Libya’s Sharara oilfield added to the concerns.
“Fundamentals may not yet be strong enough to support a continued rally, especially in growth-dependent commodities such as oil,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said in a quarterly outlook to investors.
The Sharara oilfield restarted on Wednesday. It had been producing more than 230,000 barrels per day (bpd) before armed brigades closed it on Sunday.
Still, market observers said a so-called rebalancing is well underway, meaning demand is no longer undershooting available supply.
The rebalancing is a result of strong consumption and also efforts led by the Organization of the Petroleum Exporting Countries to cut output by around 1.8 million bpd in 2017 and the first quarter of next year.
On Wednesday, Russian President Vladimir Putin said he did not exclude an extension of the cuts until the end of 2018. Russia is part of the supply agreement.
But rising oil production in the United States, which is not involved in the deal, has prevented prices from climbing further.
“The production growth from non-OPEC countries is still there so I do not expect a price rise in the near future,” Fatih Birol, executive director of the International Energy Agency, told Reuters.
U.S. output C-OUT-T-EIA hit 9.55 million bpd in late September, its highest level since July 2017, and drillers added six oil rigs in the week to Sept. 29, according to energy services firm Baker Hughes. RIG-OL-USA-BHI
Data on Tuesday from the U.S. American Petroleum Institute showed gasoline stocks rising last week by a larger-than-expected 4.9 million barrels, with crude stocks dropping by 4.1 million barrels.
Fuel inventory data from the U.S. Energy Information Administration is due later on Wednesday.
Additional reporting by Henning Gloystein in Singapore and Ron Bousso in London; Editing by Dale Hudson(Reuters)