Oil prices continued their downward trajectory on Monday as investors weighed the impact of increased OPEC+ production set for October against a sharp decline in Libyan output and weak demand from China and the U.S., the two largest oil consumers globally.
Brent crude futures fell by 57 cents, or 0.7%, settling at $76.36 a barrel by 0108 GMT. U.S. West Texas Intermediate crude dropped 50 cents, or 0.7%, to $73.05 a barrel. These declines follow a 0.3% decrease in Brent and a 1.7% fall in WTI last week.
OPEC+, the coalition of the Organization of the Petroleum Exporting Countries and its allies, is set to implement a planned increase in oil production from October. According to six sources from the producer group, eight OPEC+ members will raise output by 180,000 barrels per day. This move is part of a strategy to partially reverse the previous output cut of 2.2 million bpd while maintaining other cuts until the end of 2025.
“There are concerns that OPEC will proceed with the output increase as scheduled,” said IG market analyst Tony Sycamore. “However, this decision may hinge on the price of WTI, which would need to be closer to $80 than $70.”
In Libya, the Arabian Gulf Oil Company has resumed production at a rate of up to 120,000 bpd to meet domestic needs, while exports remain halted following a conflict that shut down most of the country’s oilfields.
Both Brent and WTI have experienced losses for two consecutive months due to economic concerns in China and the U.S. overshadowing the supply disruptions from Libya and escalating geopolitical tensions in the Middle East. China’s manufacturing activity hit a six-month low in August, with factory gate prices falling and order volumes dwindling. This has pressured policymakers to consider additional stimulus measures.
In the U.S., oil consumption in June fell to its lowest seasonal levels since the pandemic began in 2020. Analysts at ANZ have forecasted a slowdown in growth into 2025, attributing it to economic headwinds in both China and the U.S. They suggest that OPEC may need to delay the reduction of voluntary production cuts to support higher prices.
The number of active U.S. oil rigs remained steady at 483 last week, according to Baker Hughes.
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