Sep 27 2024: Oil prices held steady on Friday, but are on track for a weekly drop as investors balanced expectations of increased output from Libya and the broader OPEC+ group against new economic stimulus from China, the world’s largest oil importer.
As of 0840 GMT, Brent crude futures were up by 8 cents (0.1%), trading at $71.68 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 6 cents (0.1%) to $67.73 per barrel.
Despite the modest rise, Brent is down nearly 4% for the week, with WTI facing a decline of almost 6%.
“The oil market has been grappling with weakening demand in recent months, and OPEC+’s decision to increase production has only deepened the market’s concerns,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that while it remains unclear whether Chinese stimulus will boost fuel demand, it could still provide some relief to the oil market.
On Friday, China’s central bank lowered interest rates and injected liquidity into the banking sector, aiming to revive economic growth and meet this year’s target of approximately 5%. Additional fiscal measures are anticipated ahead of China’s National Day holidays starting on October 1, following a meeting of top Communist Party leaders that emphasized the growing urgency of addressing economic challenges.
Meanwhile, in Libya, rival factions claiming control of the Central Bank signed an agreement to end their dispute on Thursday. This conflict had slashed crude exports from over 1 million barrels per day (bpd) to just 400,000 bpd this month.
Separately, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are set to proceed with their plan to increase production by 180,000 bpd each month starting in December.
A Financial Times report earlier this week suggested that the increase stems from Saudi Arabia’s decision to abandon its $100 oil price target in favor of gaining market share. However, Saudi Arabia has denied targeting any specific oil price, and sources within OPEC+ told Reuters that the production increase aligns with existing policy rather than a significant shift.
