(Bloomberg) -- Oil fell as technical measures signaled a three-day rally driven by the threat of a halt to Libyan supplies was overdone.

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West Texas Intermediate fell 2.4% to settle around $75 a barrel after jumping more than 7% in the last three sessions. On Monday, crude failed to breach its 200-day moving average, which has served as a ceiling for price gains.

“Short-term technical factors have come into play, and the three-day rally has lost momentum as the price of a barrel of WTI has risen above $77,” Alex Kuptsikevich, FxPro senior market analyst, said in a note to clients. The 200-day moving average could now act as resistance to further gains, after having served as a floor for prices for much of the year, he added.

Libya’s eastern government declared force majeure — a legal clause allowing missed shipments — on all oil fields, terminals and facilities as it struggles with its Tripoli-based rival for control of the OPEC member’s central bank and oil riches. The 70,000 barrel-a-day El-Feel oil field was shut down.

The disruption in Libya helped to shift an oil market that had been turning steadily more bearish in recent weeks. Still, Goldman Sachs Group Inc. cut its forecasts as global supplies increase, with the OPEC+ alliance due to begin adding barrels to the market next quarter. There’s also a weak demand outlook, especially in China, the world’s No. 1 importer.

“We still assume that OPEC will raise production in Q4 as the market is potentially shifting from an equilibrium where OPEC supports spot balances and reduces volatility to a more long-run equilibrium focused on strategically disciplining non-OPEC supply and supporting cohesion,” Goldman analysts including Daan Struyven said.

The threat to exports from Libya followed an exchange of fire between Israel and Iran-backed Hezbollah over the weekend that rekindled fears that the conflict would affect physical exports from the Middle East. While both parties said that they had concluded military operations for now, the market is still watching for signs of further fallout from the war in Gaza.

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--With assistance from Antonia Mufarech.

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