Oil prices stabilized near their lowest closing levels since June 2023 as the market digested a significant draw in U.S. crude stockpiles, following a steep decline earlier this week. Brent crude hovered around $73 per barrel, having fallen nearly 8% since the start of the week. West Texas Intermediate (WTI) was trading above $69 per barrel.
The American Petroleum Institute (API) reported a decrease of 7.4 million barrels in U.S. crude inventories, according to sources familiar with the data. If confirmed by official figures later today, this would represent the largest decline in stockpiles since June.
The recent decline in oil prices has been driven by ongoing concerns about the economic outlook in major consumers, particularly China, and expectations of sufficient global supply. Additionally, speculation that OPEC+ might delay a planned output increase scheduled for October did not prevent the recent drop in prices.
Traders are also monitoring the situation in Libya, where a conflict between rival eastern and western governments poses a risk to oil production. Although oil continues to be exported from Libya, the flow has slowed. A key Libyan central banker suggested that a resolution to the dispute between the rival factions might be imminent.
The recent downturn has also impacted the oil futures market, with widely watched timespreads collapsing. Brent’s prompt spread—the difference between the two nearest contracts—was last recorded at 42 cents per barrel in backwardation, down from over a dollar for most of the previous week.
Goldman Sachs Group Inc. analysts, including Yulia Grigsby, noted that the recent selloff was disproportionate relative to the fundamental news, leaving room for a potential recovery in financial demand. Citigroup Inc.’s team, led by Anthony Yuen, projected that crude prices could bottom out around $70 to $72 per barrel.
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