HOUSTON: Brent crude oil prices fell by $1 a barrel to $72.75 on Wednesday because of pessimism about demand in the coming months as crude producers offered mixed signals about supply increases.
Brent crude futures were down 88 cents, or 1.2%, to $72.87 at 9:40 a.m. CDT (1440 GMT). U.S. West Texas Intermediate crude futures were down 90 cents, or 1.28%, at $69.44.
Both benchmarks had earlier lost $1 and then bounced back to gain $1 from Tuesday’s closes, following news OPEC+ was discussing delaying a possible output increase because Libyan production is expected to rise.
A broader sell-off had seen prices for Brent crude futures tumble as much as 11%, or about $9, in a little over a week, hitting a low of $72.63 on Wednesday.
Lackluster data from the United States and China had strengthened persistent expectations of a weaker global economy and oil demand, helping set off a broader decline in world markets.
“It’s definitely worries about a slowdown in manufacturing,” said Phil Flynn, senior analyst at Price Futures Group. “That’s the only negative we’re seeing.”
Meanwhile, traders believed there could be an end in sight to a dispute halting Libyan oil exports, bringing more crude supply back online.
That posed a challenge for OPEC+, which last week looked set to proceed with planned output hikes in October. The production group is now concerned about the market volatility, one of the sources said, and a delay to the hikes is being discussed.
“If OPEC+ does not provide reassurance that current output cuts would be extended more indefinitely, then the market could lose faith in OPEC+ defending the $70/bbl level,” Citi analysts wrote in a note.
Recent data releases fuelled wider concerns around weaker than expected demand from China, the world’s biggest crude importer, and U.S. consumption taking a hit.
Chinese data on Saturday showed manufacturing activity sank to a six-month low in August, when growth in new home prices slowed.
Meanwhile in the United States, Institute for Supply Management data on Tuesday showed manufacturing remained subdued.
Weekly U.S. inventory data has been delayed by Monday’s Labor Day holiday. The report from the American Petroleum Institute is due at 4:30 p.m. EDT (2030 GMT) on Wednesday and data from the U.S. Energy Information Administration will be published at 11:00 a.m. EDT (1500 GMT) on Thursday.
U.S. crude oil and gasoline stockpiles were expected to have fallen last week, a preliminary Reuters poll showed.
While traders were pessimistic on demand fears, changes in supply could easily change sentiments, Flynn said.
“We could flip on a dime,” he said. “It could very easily turn positive. We could see a pretty decent crude draw later today.”
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