Oil prices continued to slide during Asian trading hours following reports that Libya is set to restore its previously disrupted oil production.
Additionally, plans by OPEC+ to increase output amid concerns over a weakening Chinese economy have further pressured prices.
Global benchmark Brent crude dropped 0.57% to $73.33 per barrel, while U.S. West Texas Intermediate (WTI) futures declined 0.65%, trading at $69.88 per barrel. These declines come after U.S. crude oil futures fell more than 4% on Tuesday, reaching their lowest close since December and erasing all gains made earlier in the year.
Several factors are contributing to the ongoing decline in oil prices, according to industry experts. Andy Lipow, President of Lipow Oil Associates, highlighted the impact of China’s economic data and the situation in Libya. Over the weekend, China released its official purchasing managers’ index (PMI) for August, which fell to a six-month low of 49.1, marking the fourth consecutive month of contraction. This disappointing data has raised concerns about a sharp slowdown in China’s oil demand, as forecasted by Goldman Sachs. The bulk of this slowdown is attributed to China’s shift from oil to natural gas and electric vehicles.
Meanwhile, Libya is expected to resolve a political dispute that had cut the country’s oil production by 700,000 barrels per day. This resolution would restore production from Africa’s largest oil reserves, further contributing to the downward pressure on oil prices.
Compounding these developments, OPEC+ is reportedly planning to increase output by 180,000 barrels per day, which has raised concerns about an oversupplied market. Joshua Young, founder of oil and gas investment firm Bison Interests, noted that this anticipated production boost is also driving prices lower.
CNBC contributed to this report.
