Investors are closely monitoring oil prices as they stay stable in early trading on Friday. The market is balancing supply worries in the Middle East with indications of decreased demand. Oil futures for October delivery are set to expire today and were unchanged at 0033 GMT. Meanwhile, the more actively traded contract for November dipped slightly by 0.09% to $78.75. U.S. West Texas Intermediate crude futures also saw a minor decline of 0.14% to $75.80.
The recent surge in oil prices was primarily driven by supply disruptions in Libya, where more than half of the country’s oil production was offline on Thursday. This, coupled with potential output reductions in Iraq, has raised concerns about global oil supply. The Rapidan Energy Group estimates that Libyan production losses could range from 900,000 to 1 million barrels per day and last for several weeks.
Despite these supply challenges, oil prices are on track for a second consecutive month of decline. The market reacted with a 1% dip on Wednesday after data revealed a smaller-than-expected stock draw. Analysts had forecasted a 2.3 million barrel draw, but inventories only slipped by 846,000 barrels to 425.2 million.
Looking ahead, ANZ analysts are cautious about the medium-term outlook for oil balances, citing concerns about weak demand in 2025. They believe that OPEC will need to delay the phase-out of voluntary production cuts to support higher prices. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are set to gradually reduce production cuts of 2.2 million barrels per day from October 2024 to September 2025.
Overall, the oil market remains a complex landscape influenced by geopolitical events, supply disruptions, and demand dynamics. Investors should stay informed about these developments to make informed decisions about their financial portfolios.
