Oil Prices Rise Amidst Demand, Supply Concerns
Due mostly to supply disruptions in Libya and robust US economic data, Brent crude oil price increased above $80 per barrel on Thursday. The US economy showed slightly better growth in the second quarter, boosting investor confidence.
Meanwhile, Libya halted operations at five key export terminals, slashing its oil output by more than half and risking a significant reduction in global supply. Despite these gains, oil prices are still on track for a monthly decline, partly due to persistent concerns over China’s slowing economy, which is likely to miss its growth targets and could weaken demand in Asia.
Additionally, both Goldman Sachs and Morgan Stanley recently lowered their 2025 oil price forecasts, citing expected surpluses as China’s economic recovery loses momentum.
US benchmark West Texas Intermediate (WTI) rose by 0.27% to $77 per barrel. Weak economic data from China, the world’s largest oil importer, and the US, the largest oil consumer, triggered a fall in Brent oil prices after trading at $80.40 on Aug. 15.
Data from the Energy Information Administration (EIA) indicates a slowdown in daily drop in US crude oil inventories, which fell by 800,000 barrels, compared to the market prediction of a fall of around 2.7 million barrels.
Concern over potential supply shortages due to the suspension of oil production in Libya supported upward price movements.
Due to disagreement over the management of the Central Bank, the government of Libya, which is based in the east and is led by Osama Hammad, declared ‘force majeure’ on Monday in all oil fields, ports, and institutions and said that oil production and exports would be suspended.
Libya, one of the major members of the Organization of the Petroleum Exporting Countries (OPEC) group, produced 1.18 million barrels of crude oil per day in July. Meanwhile, conflict between Russia and Ukraine lent upward support to oil prices by fueling market players’ supply fears as both countries continue to target critical energy infrastructures.
Russia on Wednesday said that a Ukrainian drone attack caused a fire at an oil facility in the country’s Kirov region, marking the first such attack on the region.
US STOCK REPORT
Crude oil inventories in the US decreased by 0.846 million barrels for the week ending August 23, 2024, less than expectations of a 3 million barrel reduction. Meanwhile, stocks at the Cushing, Oklahoma, delivery hub dropped by 668 thousand barrels, following a 560 thousand decline in the previous period.
Gasoline inventories saw a significant decrease of 2.203 million barrels, surpassing the projected 1.5 million barrel drop. On the other hand, distillate fuel inventories rose by 0.275 million barrels, versus the forecast of 0.55 million drop. #Crude Oil Prices Rise Amidst Demand, Supply Concerns
