Oil careens lower as Libya's troubles rattle market

A worker from the Libyan Oil and Gas national company checks oil loading taps and meters at the Hariqa oil port storage in Tobruk, Libya.
Mahmud Turkia | AFP | Getty Images

Crude oil futures tumbled on both sides of the Atlantic on Monday on early signals that oil output from Libya may be starting to recover and concerns over a buildup in local government debt in China, the world's second-largest oil consumer.

Libya's Sarir and Messla oilfields are up and running, although the Hariga port they connect with needs to reopen before exports can resume. The North African OPEC producer has been pumping a mere 250,000 barrels per day (bpd) versus 1.4 million bpd in July before civil unrest disrupted flows.

China's state auditor said in a report local governments had total outstanding debt of 17.9 trillion yuan, or nearly $3 trillion, at the end of June, a sum that includes contingent liabilities and debt guarantees.

Brent crude was off about $1 to near $111 a barrel. U.S. crude ended down $1.03 at $99.29 a barrel. The contract broke above the $100-mark on Friday for the first time since Oct. 21.

The spread between Brent and West Texas Intermediate (WTI) is expected to narrow as the Keystone XL pipeline is launched in the United States. The pipeline will allow rising inventories at the Cushing, Oklahoma oil hub to move to the U.S. Gulf Coast, where a large share of the country's refining capacity is concentrated.

Rising violence in South Sudan, where crude output has fallen nearly a fifth to 200,000 bpd, checked further losses.

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