Oil prices fell today with incremental increases in Libyan oil supply and expectations that Iranian crude will add to global supply and depress prices.

According to Reuters, Brent crude dropped by 18 cents to $106.21 a barrel, while US crude slipped 12 cents to $92.47 a barrel.

Crude prices were under pressure as major powers and Iran moved a step closer resolving a long standoff over Tehran’s nuclear programme after endorsing a deal that will come into effect on 20 January and the parties are likely to start talks on a final settlement in February.

A resolution of the issue could lead to the lifting of Western sanctions on the OPEC country’s oil exports, increasing global supply.

The prices were also weighed down with the resumption of oil production at Libya’s El Sharara field, although the key issue still remains of when the blockade at its eastern oil ports will end.

But the oil prices rose shortly after data from the American Petroleum Institute (API) revealed that weekly crude stocks fell by 4.1 million barrels with a nominal build at the benchmark delivery point in Cushing, Oklahoma.

The API data also revealed that gasoline stocks rose by 5.4 million barrels and distillates fell by 1.7 million barrels.

Investors are waiting for the US Energy Information Administration data which is scheduled to release its stockpile data later today.

Image: The resumption of oil production at Libya’s El Sharara field depressed prices. Photo: courtesy of nuttakit.

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