Libyan production restoration may lead to oil prices continuing their decline, as OPEC+ plans to increase output.
- Libya's oil production resuming and weak demand in China caused oil prices to continue losing value.
- The price of Brent decreased by 0.57% to $73.33 a barrel, while the price of U.S. West Texas Intermediate futures fell by 0.65% to $69.88 per barrel.
During Asia trading hours, oil prices continued to fall following an overnight report indicating that Libya's oil production would be restored.
The decision by OPEC+ to increase production is being hindered by China's economic downturn, which is also contributing to lower prices.
The price of Brent decreased by 0.57% to $73.33 a barrel, while the price of U.S. West Texas Intermediate futures fell by 0.65% to $69.88 per barrel.
According to Andy Lipow, President of Lipow Oil Associates, the slide in oil prices is the result of multiple occurrences.
The Chinese monthly PMI for August, which fell to a six-month low of 49.1, was a disappointment, he said.
Goldman Sachs predicted a "sharp slowdown" in China's oil demand, primarily due to the transition from oil to natural gas and power through EVs. China is the world's largest importer of oil and the second-largest consumer.
Libya's oil reserves are the largest in Africa, and Lipow believes that a political solution will be reached to resolve the local blockade, resulting in the restoration of production that had been cut by 700,000 barrels per day.
On Tuesday, U.S. crude oil futures plummeted more than 4% to their lowest close since December, wiping out all gains for the year, after a report emerged that Libya's warring factions could potentially reach a deal to restore oil production following days of disruptions. The eastern government in Benghazi had halted production in a disagreement with the U.N.-backed government in Tripoli over the leadership of the central bank.
Joshua Young, founder of Bison Interests, stated that concerns about OPEC+ adding production into a market perceived as oversupplied have contributed to lower oil and gas prices.
According to Reuters, key members of the oil group signaled that they will increase output by 180,000 barrels per day.
—CNBC's Spencer Kimball contributed to this report.
Markets
You might also like
- Japan's stocks are declining following Shigeru Ishiba's victory.
- The last trading session of September in Europe is expected to begin with a decline.
- Major cities in China ease homebuying restrictions, prompting a rally in property stocks.
- Japan's Nikkei drops by 3%, while Australia reaches a new record high, as investors anticipate the release of China's data.
- Blockchain technology could revolutionize the ETF industry by enabling the use of treasurys as assets.