Oil prices showed little movement in Asian trade on Friday, with concerns over tighter supplies in Libya and Iraq offset by worries of a slowdown in demand, leading to losses for August.
Crude prices rebounded this week due to a production shutdown in Libya and reports of planned Iraqi production cuts, creating a tighter supply outlook. Signs of U.S. economic strength and expectations of interest rate cuts also supported prices.
However, fears of a cooling global oil demand as the summer season ends, along with weak economic data from China, kept concerns alive. Despite this, oil prices for October delivery rose 0.2% to $80.08 a barrel, while Brent crude for October rose 0.1% to $75.98 a barrel.
Oil prices still on track for August losses
Both contracts were down between 1.7% to 2.5% in August, hitting seven-month lows earlier in the month due to fears of a global economic slowdown. While concerns eased throughout the month, worries about slowing demand remained, particularly with few positive signals from top importer China.
Positive sentiment towards the U.S., the largest fuel consumer globally, helped mitigate oil’s losses. The expectation of interest rate cuts in September, following dovish signals from the Federal Reserve, drove this trend. Additionally, upcoming inflation data will provide further insight into U.S. rate decisions.
Iraq production cuts and Libya shutdown support oil prices
Oil prices surged over 1% on Thursday following reports that Iraq planned to reduce its oil production in September as part of an agreement with OPEC. Iraq will cut output to between 3.85 million and 3.9 million barrels per day, down from July’s 4.25 million bpd.
Production disruptions in Libya continued, with reports indicating that over half of the country’s oil output was offline this week due to a dispute over the central bank’s leadership.
Analysis: The article discusses how oil prices were relatively stable in Asian trade despite concerns over supply constraints in Libya and Iraq. The market was swayed by news of production cuts in Iraq and disruptions in Libya, leading to a mixed sentiment. While fears of reduced global oil demand lingered, positive economic indicators from the U.S. helped support prices. Overall, the article highlights the delicate balance between supply dynamics and demand outlook in the oil market, with various factors influencing price movements. Individuals should monitor these developments as they could impact energy prices and potentially their own finances.