Energy
Tuesday, September 3rd, 2024 4:26 pm EDT
Key Points
- Oil Prices Decline: U.S. crude oil futures fell nearly 4% on Tuesday, erasing all gains for the year, as concerns over increasing supply and weakening demand emerged.
- Libya’s Potential Deal: The drop in prices was influenced by reports that Libya’s rival governments might reach a deal to end a dispute that has disrupted oil production, potentially leading to a restoration of output.
- OPEC+ and Global Manufacturing: The market is also pressured by expectations that OPEC+ will increase production in October, amid disappointing manufacturing data from China and the U.S., which has further dampened demand outlooks.
On Tuesday, U.S. crude oil futures dropped nearly 4%, wiping out all gains for the year amid increasing concerns over supply and weakening demand. The decline followed reports that Libya’s rival governments might reach an agreement to resolve a conflict that has disrupted oil production. The dispute between Libya’s eastern government in Benghazi and the U.N.-backed government in Tripoli, centered around control of the central bank, had led to significant cuts in oil output. However, the governor of Libya’s central bank, Sadiq al-Kabir, indicated that a resolution was likely, which could restore Libya’s oil production and add to global supply.
Tuesday’s energy prices reflected the market’s reaction to these developments. West Texas Intermediate crude for October delivery fell to $70.65 per barrel, a 3.94% drop, leaving U.S. crude down 1.4% for the year. Similarly, Brent crude for November delivery dropped 4.5% to $74.05 per barrel, marking a 3.9% decline year-to-date. RBOB Gasoline for October fell over 5% to $1.98 per gallon, bringing its yearly decline to 5.5%. In contrast, natural gas prices saw a slight increase, with the October contract rising by 1.08% to $2.15 per thousand cubic feet, though natural gas remains down 14.5% for the year.
The broader oil market was already under pressure due to the anticipation of increased production from OPEC+ in the coming weeks, coupled with disappointing manufacturing data from both China and the U.S. OPEC+ is expected to ramp up oil production in October, as indicated by sources from Reuters and Bloomberg, despite concerns over weakening global demand. China, the world’s largest crude oil importer, reported a six-month low in manufacturing activity for August, further dampening the demand outlook. Similarly, U.S. manufacturing activity also came in weaker than expected, according to the Institute for Supply Management’s report.
Despite the planned production increase, OPEC+ had previously indicated that it could reverse this decision if market conditions warranted it. Helima Croft, head of global commodity strategy at RBC Capital Markets, suggested that given the slowing demand in China, OPEC+ might be better off delaying any production increases until December. This cautious approach could help stabilize the market as it navigates through a period of uncertain demand and potential supply increases.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/03/crude-oil-prices-today.html
