Friday’s oil prices were stable but still headed for a weekly decline as traders balanced forecasts for higher output from Libya and the larger OPEC+ group against new stimulus from China, the largest importer.
As of 1308 GMT, U.S. West Texas Intermediate crude futures were down 10 cents, or 0.15%, at $67.57, while Brent crude futures were down 21 cents, or 0.29%, at $71.39 per barrel.
Brent was down more than 4% on a weekly basis, while WTI was expected to lose about 6%.The oil market has been experiencing declining demand over the past few months, according to Priyanka Sachdeva, senior market analyst at Phillip Nova. “The recent move by OPEC+ to ramp up output has only added to the pessimism,” Sachdeva said.
“The Chinese stimulus program may yet provide some relief to the oil market, even though it is unclear whether it would result in higher gasoline consumption.”
The goal of China’s central bank’s actions on Friday was to bring the country’s economic growth back to the target of about 5% by lowering interest rates and adding liquidity to the banking sector.Following a meeting of the top officials of the Communist Party, there was a greater feeling of urgency about the increasing economic headwinds, and more austerity measures are expected to be unveiled before the Chinese holidays beginning on October 1.
As inflation pressures remained stable, consumer spending in the United States increased slightly in August, suggesting that the greatest economy in the world maintained its momentum throughout the third quarter.
On Thursday, rival groups vying for command of Libya’s central bank reached a deal to put an end to their conflict. Due to the conflict, crude shipments decreased from almost a million barrels per day (bpd) last month to just 400,000 this month.
In a related development, two OPEC+ sources announced that the Organization of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, will proceed with plans to raise output by 180,000 bpd per month beginning in December.
Saudi Arabia’s decision to give up on a $100 oil price target in favor of increasing market share is what led to the expected hike, according to a Financial Times story on Wednesday.
The intentions to increase output starting in December do not constitute a significant departure from current policy, sources within the larger group told Reuters. Saudi Arabia has consistently denied aiming for a specific oil price.According to Tamas Varga of oil broker PVM, “the move will mean a reduction in the group’s spare production capacity and these additional barrels will not make an unexpected re-appearance.”
