Oil prices slump to multi-month lows as signs Libya to end dispute, resume output
2024.09.03 15:08
Investing.com — Oil prices slumped to eight-month lows Tuesday, as potential end to a dispute in Libya that has disrupted output and worries about OPEC+ potentially increasing output later this weighed on sentiment.
At 14:18 EST (18:18 GMT), futures were down 4.6% to $70.20 a barrel, while the contract fell 5% to $73.66 a barrel.
Libyan dispute nearing end
Libya’s central bank governor Sadiq al-Kabir said an agreement between rival Libya factions appears imminent to end the dispute that would spark the country’s return to oil output, Bloomberg reported Tuesday.
Libya crude production was halted over a disagreement between rival political factions concerning control of the country’s central bank and oil revenue. The disagreement led to production plunigng to about 591,000 barrels per day as of Aug. 26, according to Libya’s National Oil Corp, well below the 1.28M barrels per day seen on Jul. 20.
Expectations for an agreement to the end the despite come after United Nations Support Mission in Libya helped broker talks in Tripoli between rival factions and said a “significant” understanding had been reached.
China worries continue to weigh on demand outlook
As well as supply concerns, worries about China-led crude demand weakness also weighed on sentiment following further signs of that Beijing is struggling to boost economic growth.
“Weekend data out of China was on the soft side,” Scotiabank said in a recent note, citing weaker economic data including composite PMI in China released Friday.
The global demand outlook is coming into added focus as U.S. summer driving season, a boon for crude demand, is now in the rearview mirror.
OPEC+ production taper jitters
Concerns about the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, loosing output restrictions starting in October, continue to worry oil bulls.
But RBC, believes, however, that the oil group may decide to extend the current output cuts through the end of the year, amid “resurgent demand concerns,” particularly from China.
“While the APAC region was supposed to carry a majority of the growth this year, China’s underperformance has dented 2024 growth projections and has continued to trail both 2023 crude import and refinery throughput levels,” RBC said in a recent note.
