Brent crude fell to a five and a half-year low of less than $57 a barrel yesterday as a global supply glut outweighed concerns of lost supply from Libya where battling militias have closed ports.The oil benchmark recovered ground later but was on track for its second weakest month since the global financial crisis of 2008, and traders said the sell-off that has halved crude prices in six months showed no sign of coming to an end.Brent LCOc1 fell $1.14 a barrel to $56.74, its lowest since May 2009, before recovering to trade around $57.70, down 18 cents, by 9.40 a.m.. U.S. crude CLc1 was up 10 cents at $53.71 after hitting $52.70also its lowest since May 2009.Oil markets have been heavily oversupplied this year due to increasing output of high quality, light oil from U.S. shale and lower-than-expected consumption as a result of faltering global economic growth and competition from alternative fuels.Several members of the Organization of the Petroleum Exporting Countries have suffered supply disruptions in recent months, but this has had little impact on prices.In Libya, clashes between rival factions have closed oil ports and terminals this month, reducing exports from the OPEC producer, which used to sell over 1 million barrels per day of crude to world markets, to almost nothing.The Organisation of Petroleum Exporting Countries, which pumps a third of the worlds oil, had been expected to trim output to try to stabilize prices, but it decided in November to keep production unchanged and let the market find its own level.PVM Oil Associates analyst Tamas Varga saw no let-up in the sell-off, saying the bears were in firm control of the market.The trend is still down and supports are expected to be under pressure. It is not recommended to go against this trend.Reuters technical analyst Wang Tao said Brent may fall to $54.98 while U.S. oil is expected to drop to $52.10.Investors awaited U.S. inventory data. The American Petroleum Institute was scheduled to release data on Tuesday while the U.S. Department of Energys Energy Information Administration will issue data on Wednesday.A Reuters poll forecast U.S. crude inventories would show a drop of 900,000 barrels, after a rise to their highest recorded level for December in the week ended on December 19.Meanwhile, OPECs oil supply fell by 270,000 barrels per day (bpd) in December to a six-month low as fighting cut Libyan output, offsetting record Iraqi southern exports and stable Saudi Arabian production.The survey indicates Libyan turmoil is effectively lowering output by the Organization of the Petroleum Exporting Countries, even after oil ministers decided at a meeting in Vienna last month against a formal reduction to defend market share.OPEC in Vienna did not decide a supply cut but supplies from Libya have been coming down since then and the situation in that country is going worse by the day, said Olivier Jakob, analyst at Petromatrix. But theres quite an overhang still, if you look at the balances for next year.Supply from OPEC averaged 29.98 million bpd in December, down from a revised 30.25 million bpd in November, according to the survey based on shipping data and information from sources at oil companies .OPEC at its Nov. 27 meeting retained its output target of 30 million bpd, sending oil pricesto a four-year low close to $71 a barrel. Crude has since fallen further, hitting a 5 1/2-year low of $56.74 on Tuesday, pressured by a global glut.Still, actual OPEC supply has fallen for a third month to the lowest since June when the group pumped 29.92 million bpd, according to Reuters surveys. September output of 30.84 million bpd was the highest since November 2012.The largest reduction has come from Libya, where output averaged 400,000 bpd in December and dropped to around 350,000 bpd by the end of the month from 800,000 bpd at the start, according to industry sources and Libyan oil officials.Fighting has closed Libyas two largest ports, Es Sider and Ras Lanuf, while the western ports of Zawiya and Mellitah have also halted oil exports.Nigerian output fell in December as crude streams including Bonny, Qua Iboe and Agbami exported fewer cargoes.
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