(Reuters) – Oil prices fell sharply on Friday as investors weighed supply concerns in the Middle East, although signs of weak demand limited gains.
Futures for October delivery, which expire on Friday, were up 23 cents, or 0.3%, at $80.17 a barrel by 0410 GMT. The best-selling November contract rose 20 cents, or 0.2%, to $79.02.
US West Texas Intermediate crude futures gained 18 cents, or 0.2%, to $76.09.
Both benchmarks settled above $1 on Thursday on oil supply concerns, up 1.5% and 1.7% respectively for the week so far.
“Continued concerns about the Libyan supply chain have been heightened by Iraq's plans to cut production, which could hamper global oil supply,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“However, the sluggish economic situation of China, the world's largest importer, continues to be a driving force behind oil demand.”
More than half of Libya's oil production, or about 700,000 barrels per day (bpd), was offline on Thursday and exports were halted at several ports following a standoff between rival political parties.
The loss of Libyan production could reach between 900,000 and 1 million bpd and last for several weeks, according to the consulting company, Rapidan Energy Group.
Meanwhile, Iraq's supplies are also expected to decline after the country's output exceeded its OPEC+ target, a source with direct knowledge of the matter told Reuters on Thursday.
Iraq plans to cut its oil supply between 3.85 million and 3.9 million bpd next month.
Brent and WTI, however, are still on track for declines of 0.7% and 2.3% in August, their second consecutive monthly declines.
Concerns about demand continue to weigh on the market, with US inventory data showing the release of crude stocks this week ended Aug. 23 is about a third smaller than expected.
“The market is concerned about the medium-term outlook, with oil balances to 2025 looking weak,” ANZ analysts said in a note.
“We believe OPEC will have no choice but to reverse the phase of voluntary production cuts if they want higher prices,” ANZ analysts said.
The Organization of the Petroleum Exporting Countries (OPEC) and partners, together known as OPEC+, will gradually stop voluntary production cuts of 2.2 million bpd during the year from October 2024 to September 2025.
