Oil prices fell today, continuing their losses after a more than 4% drop yesterday, amid expectations that the political conflict halting exports from major Libyan ports may be resolved and concerns about slowing global demand growth.
Brent crude futures for November delivery fell 28 cents, or 0.4%, to $73.47 after falling 4.9% in the previous session. US West Texas Intermediate crude futures for October delivery fell 31 cents, or 0.4%, to $70.03, after falling 4.4% yesterday.
Benchmark crude futures fell to their lowest levels since December amid signs of a deal to resolve a political dispute between rival factions in Libya that has cut production by about half and curbed exports. Libya’s two legislative bodies agreed on Tuesday to jointly appoint a central bank governor, Reuters reported on Wednesday, potentially defusing the battle for control of oil revenue that set off the dispute.
Libyan oil exports at major ports were halted on Monday, and production was cut nationwide. Libya’s National Oil Corp (NOC) declared force majeure on its El Feel oilfield on September 2.
“While disruptions in Libyan oil supply have provided some support to prices, the overall outlook for the oil market remains challenging,” explained Mohamed Hashad, Chief Market Strategist at Noor Capital. “The combination of increased supply and potential demand weakness could continue to weigh on prices in the coming months.”
Market sentiment weakened after Tuesday’s Institute for Supply Management data showed that US manufacturing remained subdued despite a modest improvement in August from an eight-month low in July.
“Recent data from China, the world’s biggest crude importer, showed that manufacturing activity sank to a six-month low in August, when growth in new home prices slowed,” the agency noted.
Weekly US inventory data has been delayed by Monday’s Labor Day holiday. The report from the American Petroleum Institute is due at 4:30 pm EDT (2030 GMT) on Wednesday, and data from the Energy Information Administration will be published at 11:00 am EDT (1500 GMT) on Thursday.
