Oil Dips Below $80 on Libya Output, Weak Demand in China
Oil dipped below $80 per barrel (bbl) in the global commodities market on Tuesday as the forces weak demand in China was supported by increase output in Libya.
Prices of crude oil had climbed strongly yesterday with Brent closing just below $81 amid fears over oil infrastructure in the Middle East if Israel-Iran conflict escalates further.
The threat of supply disruptions from the Gulf of Mexico due to Hurricane Milton further boosted optimism, ING commodities strategists said in a note.
Analysts noted that crude oil prices failed to hold on to gains this morning with both Brent and US WTI falling almost 2%, as China failed to meet the market expectations for more government spending.
Meanwhile, reports of rising oil supply from Libya only added further pressure. In a press conference, China’s National Development and Reforms Commission (NDRC) failed to announce any new supportive measures.
Without policy support, an economic slowdown could keep China’s oil demand subdued in the short to medium term, ING said.
The latest comments from the NDRC also suggest that China has enough stocks of heating fuel to ensure safe supplies during the peak winter season.
The nation has coal inventories with domestic power plants at around 200mt (which can cover 30 days), while it has 8bcm natural gas reserves to meet peak demand.
There are suggestions that crude oil production in Libya has climbed above 1m bbls/d for the first time in two months, following the resolution of a political standoff.
Reports suggest that oil output in the region reached 1.1m bbls/d, following the removal of a blockage by the eastern government on 3 October.
oil output in the Sharara oil field increased to around 240k bbls/d (rising towards its full capacity), while Waha Oil Co. was operating at half of its normal capacity and produced around 150k bbls/d of oil as a pipeline is being repaired. Libya normally produces more than 1.2m bbls/d, which fell to under 450k bbls/d in August due to political tensions.
Data from India’s Petroleum Planning & Analysis Cell (PPAC) shows that oil product consumption in September fell 1.6% year-on-year to 17.9mt, the lowest since September 2022. #Oil Dips Below $80 on Libya Output, Weak Demand in China
