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Oil prices rose slightly on Friday as investors weighed concerns over supply disruptions in Libya and Iraq, though signs of weakened demand, particularly from China, capped the gains.
Price Movements
- Brent Crude: October futures increased by 39 cents, or 0.5%, to $80.33 a barrel. The November contract, more actively traded, rose 34 cents, or 0.4%, to $79.16.
- West Texas Intermediate (WTI): Futures gained 30 cents, or 0.4%, to $76.21.
Both benchmarks recorded gains of over $1 on Thursday, driven by supply concerns. For the week, Brent crude and WTI are up 1.6% and 1.8%, respectively.
Supply Concerns
- Libya: More than half of Libya’s oil production, approximately 700,000 barrels per day (bpd), was offline as of Thursday, with exports halted at several ports due to a standoff between rival political factions. Consulting firm Rapidan Energy Group estimates that Libyan production losses could range from 900,000 to 1 million bpd and may last several weeks.
- Iraq: Iraq’s oil output is expected to decrease after exceeding its OPEC+ quota. The country plans to cut production to between 3.85 million and 3.9 million bpd next month.
Demand Concerns
Despite the supply disruptions, oil prices are still on track for declines of 0.5% and 2.2% for August, marking their second consecutive monthly drops. Worries about demand persist:
- U.S. Inventory Data: A crude stock draw for the week ending August 23 was about a third smaller than expected.
- China: August imports are anticipated to rise, but July’s intake of 9.97 million bpd was the lowest daily average since September 2022.
OPEC+ Plans
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are set to gradually phase out voluntary production cuts of 2.2 million bpd from October 2024 to September 2025.
Market Outlook
While supply issues have provided some support for oil prices, ongoing concerns about demand, particularly from key markets like China and the U.S., continue to weigh on the market. The combined effect of these factors is likely to influence price movements in the near term.
