U.S. crude falls below $70 per barrel for the first time this year, driven by concerns of a supply glut as OPEC+ anticipates a production increase and Libyan output is expected to recover soon.
Global oil prices dropped by 1.5% during U.S. trading on Wednesday, deepening losses and hitting 2024 lows amid worries over global demand as industrial sectors in both the U.S. and China continue to struggle.
Prices are also weighed down by the anticipated production increase from OPEC+ in October, along with the expected recovery of Libyan oil output in the near future.
Traders are now looking ahead to the release of preliminary U.S. crude stock data later today, with analysts forecasting a second consecutive weekly drawdown.
Prices
U.S. crude dropped 1.5% today, reaching $69.21 per barrel, its lowest since December 2023, after hitting a session-high of $71.42.
Brent crude declined 1.4%, settling at $72.67 per barrel, also the lowest since December 2023.
On Tuesday, U.S. crude plunged 5.3%, while Brent fell 4.6%, marking the largest single-day loss since October 5, 2023.
Global Demand
A string of weak industrial data from both the U.S. and China has reignited concerns about a potential global GDP contraction, which could negatively affect fuel demand.
Chinese Demand
In a memo released in late August, Goldman Sachs predicted a significant slowdown in Chinese oil demand as the economy continues to decelerate, with a shift in focus from oil to natural gas.
OPEC+
Energy experts have observed that an October production increase by OPEC+ would exacerbate the existing supply glut, with key members of the group reportedly planning to boost production by 180,000 barrels per day, according to Reuters.
Libyan Output
Regarding the Libyan crisis, experts anticipate a political resolution in the near future, which could enable a return to previous production levels following a 700,000 barrels per day decrease due to ongoing conflicts.
US Stocks
Later today, the American Petroleum Institute will release data on U.S. crude stocks, which is expected to show another drawdown. Tomorrow, official data from the Energy Information Administration (EIA) will be published.
Comments