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Oil prices waver as Libya restarts output, supply concerns ease

Oil futures wavered on Tuesday after Libya restarted production at its largest oil field while freezing temperatures across North Dakota continued to impact output.

West Texas Intermediate (CL=F) dropped as much as 1% before moving up towards the flatline midday, trading north of $74 per barrel. Brent futures (BZ=F) were trading near $79 per barrel after rising almost 2% in the prior session.

Libya’s oil production has returned to 1.2 million barrels per day following an interruption of three weeks due to protests.

Traders were also monitoring Russian crude exports impacted by a recent Ukrainian drone strike against a key fuel terminal in the Baltic Sea region. The damaged site has partially resumed exports.

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Meanwhile a cold snap across the US recently knocked off production of almost 200,000 barrels of crude per day in North Dakota.

"Still, unless we see escalation of tensions in the Red Sea that actually curtails oil sales, the upside to crude prices looks limited," said Dennis Kissler, senior vice president at BOK Financial, on Tuesday.

The US and UK continued retaliatory strikes on Monday against Houthi-controlled areas in Yemen. The rebels backed by Iran have been targeting vessels making their way through the Red Sea, prompting companies to suspend or reroute their shipments away from the area.

SANA'A, YEMEN - JANUARY 22: Houthi fighters manning machine guns mounted on vehicles during a tribal parade held against the United States-led aerial attacks launched on sites in Yemen, and solidarity with Palestinians, on January 22, 2024, near Sana'a, Yemen. The Houthi-run Air forces continue launching missiles and drones at what they consider targeting ships linked to Israel or sailing to Israeli ports at the Red Sea and Bab Al-Mandb Strait, the move created a crucial maritime crisis, which was followed by the creation of a military coalition by the United States in an attempt to deter attacks on international shipping in the Red Sea, although the reiterated Houthis declarations that all that they target only are the ships that owned or linked to Israel ships. (Photo by Mohammed Hamoud/Getty Images)
Houthi fighters manning machine guns mounted on vehicles during a tribal parade held against the United States-led aerial attacks launched on sites in Yemen, and solidarity with Palestinians, on Jan. 22, 2024, near Sana'a, Yemen. (Mohammed Hamoud/Getty Images) (Mohammed Hamoud via Getty Images)

"The disruption in the Red Sea is leading to longer delivery times as a large percentage of ships are continuing to avoid the region," Stephen Schwartz, executive vice president of Wells Fargo global receivables and trade finance, told Yahoo Finance on Monday.

"The risk of impact increases the longer the disruption continues," he added.

Earlier this month Danish oil tanker group Torm (TRMD) said it was pausing all shipments through the southern Red Sea. The company owns more than 80 vessels that transport refined energy products and chemicals.

British oil and gas giant Shell (SHEL) has also said it would avoid the area.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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