Oil prices: Brent crude slips below $55 a barrel as stronger dollar and expected Libya output increase weigh on market

Francesca Washtell
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Brent crude was trading at $57 a barrel last week (Source: Getty)

There's been little Christmas cheer for oil today, with Brent crude has slipping below $55 a barrel after a stronger US dollar and higher estimated oil output from Libya weighed on the market.

The global benchmark has slipped 0.54 per cent to $54.74 a barrel, while US sweet crude is down 0.59 per cent to $52.64.

Libya's National Oil Corporation hopes to add 270,000 barrels per day (bpd) to national production over the next three months after announcing on Tuesday the reopening of pipelines leading from two major fields in the country, El Feel and Sharara.

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The dollar index steadied today, but remains not far below a 14-year peak of 103.65 reached earlier this week.

When the greenback rises, it makes dollar-denominated commodities such as oil more expensive for holders of other currencies.

An unexpected increase in US crude stocks reported on Wednesday in the Energy Information Agency's weekly supply report also sucked some Christmas cheer out of the market.

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Brent still trading at its highest levels since mid-2015 and has rallied around 20 per cent since November 29, the day before a major Opec deal was announced.

The Organisation of the Petroleum Exporting Countries (Opec) agreed on 30 November to slash production among its 13 members by 1.2m bpd from 1 January for six months.

A later agreement with 11 non-Opec oil producing nations, who agreed to cut production by 558,000 bpd between them over the same period of time, has brought the total production cut to 1.8m bpd.

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Prices are forecast to enter the $60 a barrel territory in the first quarter of next year, when Opec's deals are due to come into effect (on the other hand, French group Engie SA has warned prices could dip as low as $10 a barrel within a decade).

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