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Oil extends advance above US$52 as Libyan output comeback stalls

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Oil extended its gains above US$52 a barrel as a planned production boost from Libya stalled amid continuing tension in the Opec member exempt from agreed output cuts.

[HONG KONG] Oil extended its gains above US$52 a barrel as a planned production boost from Libya stalled amid continuing tension in the Opec member exempt from agreed output cuts.

Futures climbed as much as 1.2 per cent in New York after rising two per cent on Friday. Libyan oil-facility guards have backtracked on an agreement to allow supply to flow from the El Feel and Sharara fields, two of the country's biggest, according to an engineer that operates El Feel.

Money managers increased their net-long positions on West Texas Intermediate to the highest since July 2014, US Commodity Futures Trading Commission data showed.

Oil has traded near US$50 a barrel since the Organization of Petroleum Exporting Countries agreed Nov 30 to reduce production for the first time in eight years.

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Goldman Sachs Group Inc last week increased its second-quarter crude price forecasts and predicted stockpiles would return to normal levels by the middle of 2017 amid the curbs that include non-Opec nations from Russia to Mexico.

"Libya is the largest key variable on the supply side in the short term, so the fact there is an element of doubt on field restarts is one thing supporting the market," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

"The downside for oil is fairly limited at the moment after the Opec agreement to cut production."

WTI for January delivery, which expires Tuesday, rose as much as 62 US cents to US$52.52 a barrel on the New York Mercantile Exchange and was at US$52.21 at 7.55am in London. The contract gained US$1 to US$51.90 on Friday.

Total volume traded was about 16 per cent above the 100-day average. The more-active February future gained 31 US cents to US$53.26 a barrel.

Brent for February settlement climbed as much as 59 US cents, or 1.1 per cent, to US$55.80 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of US$2.14 to February WTI.

A group of Libyan guards prevented the flow of oil by pipeline, Khaled Hadloul, an engineer at Mellitah Oil & Gas, which operates El Feel, said by phone. The Repsol SA-operated Sharara field is also yet to restart because both fields feed into the same pipeline network, Mr Hadloul said.

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