Oil prices stabilized in Asian trade on Thursday following significant losses in the previous session, driven by signs of a potential increase in Libyan production. Despite this, prices are expected to see strong gains this week, especially after China, the top importer, announced a series of stimulus measures to boost growth. Additionally, U.S. oil inventories have decreased more than anticipated, pointing towards a tight market outlook.
Crude oil futures expiring in November edged up by 0.1% to $73.51 a barrel, while Brent crude rose by 0.1% to $69.73 a barrel by 20:57 ET (00:57 GMT). Despite both contracts experiencing a 2% decline on Wednesday, they have shown significant gains over the past two weeks, rebounding from nearly three-year lows.
The recent boost in oil prices can be attributed to escalating tensions in the Middle East, with Israel continuing its offensive against Hamas and Hezbollah. Furthermore, a substantial interest rate cut by the Federal Reserve has bolstered sentiment regarding oil demand.
Libya Progresses Towards Resuming Production
Wednesday saw a sharp decline in oil prices following reports that delegates from Libya’s east and west factions had reached an agreement on appointing a new central bank governor. This move is expected to resolve a crisis that had led to the shutdown of most of the country’s oil production. The production disruptions had resulted in at least 1 million barrels per day being taken offline, and any resumption in production is likely to ease market tightness.
US Inventories Decline More Than Expected
Oil prices reacted to data showing a significant 4.47 million barrel draw in U.S. inventories, surpassing expectations. Both crude and gasoline inventories also decreased, indicating robust demand in the U.S. market. These declines were influenced by disruptions in U.S. oil production, particularly due to adverse weather conditions in the Gulf of Mexico. With Hurricane Helene passing through the region this week, further disruptions are expected.
Analysis: The recent developments in the oil market, including the potential increase in Libyan production and the unexpected draw in U.S. inventories, are likely to have a significant impact on oil prices. Investors should closely monitor these factors as they could influence market trends and investment decisions. Additionally, consumers may see fluctuations in fuel prices based on these developments, affecting their overall expenses.