Commodities: Crude futures slump on reports of two Libya oilfields resuming output

Crude-oil futures slumped more than 2% on Thursday afternoon as a report said two key oilfields in Libya have resumed pumping against a backdrop of rising US shale output and the now chronic global glut.

At 15:42 BST, Nymex-priced West Texas Intermediate crude was down 2.16% to $48.55 a barrel. Intercontinental Exchange-traded Brent was down 2.1% to $50.73 a barrel.

In Libya, the Sharara and El Feel oilfields had restarted production, said a source-based Reuters report. This was in a market already saturated with oil inventories and questions lingering on cartel Opec's production cut pledges made last year.

Sharara had an output limit of about 300,000 barrels a day (bpd), while El Feel's was about 90,000 bpd.

Joshua Mahony, market analyst at IG, said the oil market was in a tug-of-war, with the improved conformity amongst Opec and non-Opec members being somewhat overshadowed by rising output from US shale producers.

"With crude prices continuing to decline despite yesterday's release of the largest fall in Energy Information Administration crude inventories in 2017, there are clear fears that US output will continue to undermine any output cuts elsewhere," said Mahony.

Michael Hewson, chief market analyst at CMC Markets UK, further noted that for all the upbeat jawboning from Opec secretary general Mohammed Barkindo's optimism that the overhang in global inventories was on the decline.

"It's increasingly clear that markets aren't quite ready to buy into this narrative quite yet, as crude oil prices once again came under pressure," said Hewson.

"A drop through the 200 day MA has seen some technical selling kick in with the lows of the year once again coming under pressure."

Meanwhile, on Comex, gold was up 0.03% to $1264.6 an ounce. Silver fell 0.67% to $17.32 an ounce, and copper shed 1% to 257.45 cents a pound.

"Gold prices are currently struggling to trade away from two week lows, despite some disappointment from the lack of clarity on Trump tax plans and some equity market weakness," said Hewson.

On London Metals Exchange, three-month industrial metals were mostly ahead. Tin rose 1.45%, zinc firmed 0.79%, copper atted 0.16% and aluminum gained 0.08%.