Today’s News
Oil prices continued to fall on Monday as investors weighed the potential for increased OPEC+ production in October against a sharp drop in Libyan output and ongoing weak demand from China and the United States, the world’s top two oil consumers.
Image Source: Associated Press
Brent crude futures dropped 57 cents, or 0.7%, to USD 76.36 per barrel by 0108 GMT, while U.S. West Texas Intermediate (WTI) crude declined by 50 cents, or 0.7%, to USD 73.05 per barrel. These declines followed a 0.3% decrease for Brent and a 1.7% drop for WTI last week.
OPEC+ members are reportedly set to proceed with an increase in oil production starting in October, according to six sources within the group. The plan includes eight members boosting output by 180,000 barrels per day as part of a strategy to partially unwind recent cuts totaling 2.2 million bpd, while maintaining other cuts through to the end of 2025.
“There are concerns that OPEC will go ahead and increase output from October,” said Tony Sycamore, a market analyst at IG. “However, I think that outcome is price dependent in that it happens if the WTI price is closer to USD 80 than USD 70.”
In Libya, the Arabian Gulf Oil Company has resumed output up to 120,000 bpd to meet domestic needs, but exports remain halted due to a standoff between factions that has shut down most of the country’s oilfields.
Despite the disruption in Libyan supply and rising geopolitical tensions in the Middle East, both Brent and WTI have recorded losses for two consecutive months, largely due to economic concerns in China and the U.S.
China’s manufacturing activity hit a six-month low in August, with factory gate prices falling and orders shrinking, according to an official survey released on Saturday. This has increased pressure on policymakers to introduce more stimulus measures.
“The softer-than-expected China PMI released over the weekend heightens concerns that the Chinese economy will miss growth targets,” Sycamore added.
Meanwhile, in the U.S., oil consumption dropped in June to its lowest seasonal levels since the COVID-19 pandemic began in 2020, according to the U.S. Energy Information Administration.
“We see downside in growth in 2025, driven by economic headwinds in China and the U.S.,” analysts at ANZ noted in a report. “We believe OPEC will have no choice but to delay the phase out of voluntary production cuts if it wants higher prices.”
The number of active U.S. oil rigs remained steady at 483 last week, as reported by Baker Hughes.
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