2020.01.2219:06:00UTC+00Crude Oil Futures Settle Sharply Lower

Crude oil prices declined sharply on Wednesday, weighed down by concerns about outlook for energy demand and on the International Energy Agency's report that forecasts a jump in global oil supply.

Reports about supply disruptions in Libya failed to support crude oil prices. A recent report from the Energy Information Administration (EIA) said that despite a slow pace of rise, U.S. crude production will likely increase to record highs next month.

West Texas Intermediate Crude oil futures for March ended down $1.64, or about 2.8%, at $56.74 a barrel.

WTI Crude oil futures for March ended down $0.20, or 0.3%, to $58.38 a barrel on Tuesday.

The International Energy Agency (IEA) said a surplus of one million barrels per day of oil will keep a lid on oil prices in the first half of 2020.

"I see an abundance of energy supply in terms of oil and gas," the head of the IEA, Fatih Birol, told the Reuters Global Markets Forum on Tuesday, while attending the World Economic Forum meeting in Davos.

"It's the reason that recent incidents we have seen - with the Iranian general killed, Libya unrest - didn't boost international oil prices," Birol added.

According to a recent report from the EIA, crude oil production from seven major U.S. shale plays may climb by 22,000 barrels a day in February to 9.2 million barrels a day. Oil output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, is expected to see the biggest increase, up 45,000 barrels a day in February from January, the report said.

Meanwhile, concerns around supply disruptions in Libya, Iran and Iraq have faded, with analysts now saying that any supply disruptions could be offset by increased output from the Organization of the Petroleum Exporting Countries (OPEC).

The weekly oil reports from the American Petroleum Institute (API) and the Energy Information Administration are due later today and tomorrow morning, respectively.