Oil Dips as China’s Data Raises Demand Concerns
Oil prices dipped as data showed lingering economic weakness in China following the release of the country’s purchasing manager index. Data from the global commodities market showed that Brent futures settled 2.4% lower on the day while US benchmark West Texas Intermediate dipped likewise.
The price of international benchmark Brent crude stood at $76.93 per barrel, while American benchmark West Texas Intermediate (WTI) was at $73.55 a barrel. According to market analysts, speculative positioning in the oil market remains fairly limited due to demand concerns and the uncertainty over OPEC+ policy.
OPEC+ supply is set to rise from October as eight of the group’s members are scheduled to boost output by 180,000 barrels per day next month, as part of a plan to begin unwinding their most recent layer of output cuts of 2.2 million bpd while keeping other cuts in place until end-2025.
Members of the oil group are leaning towards sticking to their plan and gradually unwinding cuts from October, ING says in a Monday note. Given lingering demand concerns, there had been a growing part of the market, analysts said who thought the group would delay any supply increases.
The group may believe that supply disruptions from Libya provide an opportunity to increase supply. Libyan supply disruptions continue as the country halted crude oil export on political reason. However, while output has been cut further in some fields, others are seeing production being restored. Three oil fields, including Sarir, Messla and Nafoura are restarting output.
‘It is not clear whether the resumption of operations at these fields signals progress in negotiations between Libya’s Western and Eastern governments.
“However, there are some suggestions that the restarting of these fields is to meet domestic demand rather than exports” ING commodities strategists Warren Patterson and Ewa Manthey said.
Bearish sentiment in the oil market has continued in early morning trading today. Chinese PMI data released over the weekend have raised further concern over demand. China’s manufacturing PMI came in at 49.1 for August, below the consensus of 49.5 and also the fourth consecutive month of contraction in manufacturing activity.
The number of oil rigs in the US remained unchanged this week, oilfield services company Baker Hughes data showed Friday. The number of oil rigs, an indicator of short-term production in the country remained flat at 483 for the week ending August 30. The number of US oil rigs fell by 29 compared to one year ago. #Oil Dips as China’s Data Raises Demand Concerns
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