Noor Trends News, Technical Analysis, Educational Tools and Recommendations
Oil prices continued their downward trend on Wednesday, extending the more than 4% drop seen in the previous session. The market remains under pressure, hovering at its lowest levels since December, driven by expectations of a potential resolution to the political dispute in Libya that has halted oil exports, along with ongoing concerns over sluggish global demand.
Brent and WTI Futures Drop
By 06:45 GMT, Brent crude futures for November delivery had fallen 43 cents, or 0.6%, to $73.32 per barrel, adding to the previous day’s steep decline of 4.9%. Similarly, U.S. West Texas Intermediate (WTI) crude futures for October delivery dropped 49 cents, or 0.7%, to $69.85 per barrel, after a 4.4% decrease on Tuesday. Both benchmarks are trading at their lowest levels since December 2023, reflecting a market increasingly concerned about demand and potential oversupply.
The sharp declines in oil prices are partly attributed to developments in Libya, where a political dispute has significantly disrupted oil production and exports. Libya’s two legislative bodies reached an agreement on Tuesday to jointly appoint a central bank governor, a move that could defuse the battle for control over oil revenue that led to the current production cuts. This dispute had previously prompted Libya’s National Oil Corporation (NOC) to declare force majeure on its El Feel oilfield, cutting national production by about half and halting exports at major ports.
In addition to the situation in Libya, market sentiment was further weakened by disappointing economic data from the U.S. and China. The Institute for Supply Management (ISM) reported that U.S. manufacturing activity remained subdued in August, despite a modest improvement from an eight-month low in July. In China, the world’s largest crude importer, manufacturing activity also showed signs of weakness, sinking to a six-month low in August, with growth in new home prices slowing.
Inventory Data Delays and Market Expectations
Adding to the uncertainty, the release of U.S. inventory data has been delayed due to the Labor Day holiday on Monday. The American Petroleum Institute (API) is expected to release its report on crude oil and gasoline stockpiles at 4:30 p.m. EDT (20:30 GMT) on Wednesday, followed by the Energy Information Administration’s (EIA) data at 11:00 a.m. EDT (15:00 GMT) on Thursday. Preliminary estimates from a Reuters poll suggest that U.S. crude oil and gasoline inventories likely fell last week, while distillate stocks may have increased.
As the market awaits further data and developments, the outlook for oil prices remains clouded by the potential resolution in Libya and ongoing concerns over global economic growth and energy demand.
