Oil prices tumble on signs of Libyan comeback

Oil prices Thursday fell sharply on news that a major Libyan field could come back on line later this week. US benchmark West Texas Intermediate for February delivery fell $2.98 to $95.44 a barrel on the New York Mercantile Exchange. In London, Brent oil for February delivery tumbled $3.02 to $107.78 a barrel in London. A spokesman for the Libyan National Oil Corporation (NOC) told AFP Thursday that the  330,000 barrel a day El Sharara field is expected to resume normal output within two or three days, once protesters who have blocked production pull out. Oil production in Libya has plunged to about 250,000 barrels a day from nearly 1.5 million in the face of demands from armed protesters for more regional autonomy and greater say over the distribution of oil revenues. "There's a sense there could be a settlement (with the protestors) and we'll be able to get that oil back on the market," said John Kilduff, founding partner at Again Capital. Key export terminals in eastern Libya remain blockaded. However, NOC announced earlier this week that two oilfields in southern Libya had resumed on Sunday. Oil prices also took a hit from a mediocre report on Chinese manufacturing. The HSBC index on Chinese manufacturing activity came in at 50.5 in December, the lowest reading in three months. Traders will get a fresh round of data on Friday, when the Department of Energy releases its weekly report on US oil inventories. A Wall Street Journal survey of analysts forecast a drop of 2.2 million barrels in what would be the fifth straight week to see a decline.