Libya Plus Demand Worries Trigger More Losses For Oil

However, some analysts are baffled by the bearish market sentiment: File Image/Pixabay

The persistent worry that the remainder of 2024 could witness eroding demand for oil caused crude traders on Wednesday to extend the commodity's losses, this time by over $1 per barrel.

Brent settled down $1.05 to $72.70 per barrel, while West Texas Intermediate settled down $1.14 at $69.20 per barrel.

The losses were influenced by earlier news that China's purchasing managers' index slipped to 49.1 from 49.4 in July, its sixth straight decline and fourth month below the 50 mark separating growth from contraction, and also Chinese producers reporting factory gate prices at their worst in 14 months, from 46.3 in July to 42.

However, the newer impetus for crude's sell-off was an end in sight to the dispute halting oil exports from Libya: its two legislative bodies agreed to appoint jointly a central bank governor in a bid to sort out a battle for control of the country's oil revenue.

Meanwhile, traders weren't appeased by reports that the Organization of the Petroleum Exporting Countries' (OPEC), which had been planning to unwind its production cuts next month, are now worried about pricing and that a delay to the hikes are now being discussed.

Svetlana Tretyakova, senior analyst at Rystad Energy, stated in a note on Wednesday, "With demand growth uncertain and significant supply outages looking unlikely, all eyes are again on OPEC; until OPEC+ clarifies its strategy, overall bearishness will persist."

Giovanni Staunovo, a strategist at UBS, shared his thoughts on the behaviour of oil traders with clients by remarking, "The market reaction to these supply stories shows how weak sentiment in the oil market is currently."

Joshua Young, founder of Bison Interests, was a rare source of optimism on Wednesday when he not only stated that he does not think that OPEC is going to "flood the market" but also remarked   "I'm still bullish: I think that China demand concerns are overstated and am seeing green shoots."