Oil Climbs on Stronger US Economy and Libya Outages
by Bloomberg | Devika Krishna Kumar and Antonia Mufarech
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil prices jumped on robust US economic data and worsening supply disruptions in Libya.
Brent rose 1.6% to settle just below $80 a barrel after losing more than 3% over the previous two sessions. West Texas Intermediate ended the session near $76 a barrel, close to its 200-day moving average, which has recently acted as a ceiling. The US economy grew at a slightly stronger pace in the second quarter, lifting equities.
Prices surged further as Libya suspended oil exports from five eastern ports while the country’s output dipped further amid an escalating stalemate over who controls the central bank. Oil output has more than halved this week to less than 450,000 barrels a day since the disruption began.
“A continued outage from Libya will all but erase the expected fourth-quarter stock build and generate a draw, which will put stocks at perilously low levels,” said Scott Shelton, an energy specialist at TP ICAP Group Plc.
Another driver for the rally in oil prices is the continued risk that Israel’s conflict with Hezbollah or Iran will escalate, said Robert Yawger, director of the energy futures division at Mizuho Securities USA. Over the weekend, 100 Israeli warplanes swooped over southern Lebanon, taking out thousands of Hezbollah missile launchers in what was called a preemptive strike. Although tensions deescalated on Monday, the risk of a region-wide war is still present.
Global benchmark Brent is still on track for a small decline this month, even after repeated drops in US stockpiles that are tightening global supplies. Worries about growth in China are also persistent as it is likely to miss its GDP growth target this year, according to a Bloomberg survey, undermining demand in Asia’s biggest economy.
Goldman Sachs Group Inc. and Morgan Stanley have cut their 2025 oil price forecasts in recent days, with both expecting a surplus next year as China’s recovery loses steam.
Still, crude is modestly higher for the year as expectations of lower interest rates in the US and OPEC+ supply discipline counter lackluster Chinese demand. The possibility of the cartel boosting output from October is hanging over the market, however. Traders are split on whether the planned increases will go ahead, according to a Bloomberg survey.
“The flagging economic data out of China remains a headwind, and if the Middle East situation can resolve or signal that it will resolve, I expect prices to resume their downward trajectory,” said John Kilduff, co-founder of Again Capital LLC.
Prices
- Brent climbed 1.6% to settle at $79.94 a barrel.
- WTI rose 1.9% to settle at $75.91 a barrel.
by Bloomberg | Devika Krishna Kumar and Antonia Mufarech
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas