Concern about supply provides support, but signs of weakened demand limit gains
30 August 2024 - 07:49
byGeorgina McCartney and Emily Chow
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An offshore oil rig platform is photographed in Huntington Beach, California, US. Picture: REUTERS
Houston/Singapore — Oil prices inched higher on Friday as investors weighed supply concerns in the Middle East, though signs of weakened demand limited gains.
Brent crude futures for October delivery, which expire on Friday, were up 23c, or 0.3%, at $80.17 a barrel by 4.10am GMT. The more actively traded contract for November rose 20c, or 0.2%, to $79.02.
US West Texas Intermediate (WTI) crude futures gained 18c, or 0.2%, to $76.09.
Both benchmarks settled more than $1 higher on Thursday on oil supply concerns, up 1.5% and 1.7% respectively for the week so far.
“Ongoing concerns over dented Libyan supplies were magnified by Iraq's plans to tame production, which together can dent the global supplies of oil,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“However, the sombre economic outlook of mainland China, the world's largest importer of crude oil, continues to be a constant headwind on oil demand.”
More than half of Libya's oil production, or about 700,000 barrels a day (bbl/day), was offline on Thursday and exports were halted at several ports following a standoff between rival political factions.
Libyan production losses could reach between 900,000 and 1-million barrels a day and last for several weeks, according to consulting firm, Rapidan Energy Group.
Meanwhile, Iraqi supplies are also expected to shrink after the country’s output surpassed its Opec+ (Opec and its allies) quota, a source with direct knowledge of the matter told Reuters on Thursday.
Iraq plans to reduce its oil output to between 3.85-million and 3.9-million barrels a day in September.
Brent and WTI, however, are still headed for declines of 0.7% and 2.3% for August, their second consecutive monthly drops.
Worries over demand continue to weigh on the market, with US inventory data showing a crude stock draw for the week ended on August 23 around a third smaller than expected.
“The market is concerned about the medium-term outlook, with oil balances for 2025 looking weak,” ANZ analysts said in a note.
“We believe Opec will have no choice but to delay the phase out of voluntary production cuts if it wants higher prices,” the ANZ analysts said.
Opec+, is set to gradually phase out voluntary production cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil edges higher on Middle East supply worries
Concern about supply provides support, but signs of weakened demand limit gains
Houston/Singapore — Oil prices inched higher on Friday as investors weighed supply concerns in the Middle East, though signs of weakened demand limited gains.
Brent crude futures for October delivery, which expire on Friday, were up 23c, or 0.3%, at $80.17 a barrel by 4.10am GMT. The more actively traded contract for November rose 20c, or 0.2%, to $79.02.
US West Texas Intermediate (WTI) crude futures gained 18c, or 0.2%, to $76.09.
Both benchmarks settled more than $1 higher on Thursday on oil supply concerns, up 1.5% and 1.7% respectively for the week so far.
“Ongoing concerns over dented Libyan supplies were magnified by Iraq's plans to tame production, which together can dent the global supplies of oil,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“However, the sombre economic outlook of mainland China, the world's largest importer of crude oil, continues to be a constant headwind on oil demand.”
More than half of Libya's oil production, or about 700,000 barrels a day (bbl/day), was offline on Thursday and exports were halted at several ports following a standoff between rival political factions.
Libyan production losses could reach between 900,000 and 1-million barrels a day and last for several weeks, according to consulting firm, Rapidan Energy Group.
Meanwhile, Iraqi supplies are also expected to shrink after the country’s output surpassed its Opec+ (Opec and its allies) quota, a source with direct knowledge of the matter told Reuters on Thursday.
Iraq plans to reduce its oil output to between 3.85-million and 3.9-million barrels a day in September.
Brent and WTI, however, are still headed for declines of 0.7% and 2.3% for August, their second consecutive monthly drops.
Worries over demand continue to weigh on the market, with US inventory data showing a crude stock draw for the week ended on August 23 around a third smaller than expected.
“The market is concerned about the medium-term outlook, with oil balances for 2025 looking weak,” ANZ analysts said in a note.
“We believe Opec will have no choice but to delay the phase out of voluntary production cuts if it wants higher prices,” the ANZ analysts said.
Opec+, is set to gradually phase out voluntary production cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.
Reuters
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