Oil prices ease on strong supply hopes, China stimulus limits losses By Reuters
Written by Gabrielle Ng and Shariq Khan
SINGAPORE (Reuters) – Oil prices fell for a third day on Friday and were on pace to fall for the rest of the week as investors focused on expectations of increased output from Libya and the wider OPEC+ group, although fresh stimulus from top exporter China lost ground.
Futures were down 20 cents, or 0.28%, at $71.40 a barrel as of 0433 GMT, while US West Texas Intermediate crude futures were down 14 cents, or 0.21%, at $67.53 .
On a weekly basis, Brent crude was down 4%, while WTI was on track to slide 6%.
While investors across asset classes were upbeat after Chinese authorities finally released some stimulus, oil markets appear to be focused on Libya and OPEC this week, said Priyanka Sachdeva, chief market analyst at Phillip Nova.
“The recent decision by OPEC+ to increase production has only added to the gloom”, said Sachdeva, adding that the oil market has been struggling due to weak demand in the past few months.
“While there is no guarantee that China's stimulus will translate into higher fuel demand, it may provide some relief to the oil market.”
China's central bank on Friday cut interest rates and pumped cash into banks as Beijing stepped up efforts to return economic growth to this year's target of around 5% and combat inflationary pressures.
More monetary measures are expected to be announced ahead of China's holiday that starts on October 1, after a meeting of top Communist Party leaders showed a growing sense of urgency about rising economic conditions.
Meanwhile, the warring parties seeking control of the Central Bank of Libya signed an agreement to end their conflict on Thursday. The dispute has caused a sharp drop in oil production and exports, with exports falling to 400,000 barrels per day (bpd) this month, from more than 1 million barrels last month.
The deal could see more than 500,000 bpd of Libyan supply return to the market, said ANZ Bank analyst Daniel Hynes.
Separately, the Organization of Petroleum Exporting Countries (OPEC), and its allies, a group known as OPEC+, are currently cutting oil production by a total of 5.86 million bpd but plan to roll back 180,000 bpd of those cuts in December.
A press release on Wednesday said the previously announced change was due to Saudi Arabia's decision to abandon the $100 oil price and gain market share, which caused oil prices to drop by 3% in the past.
Saudi Arabia, the de facto leader of OPEC +, has repeatedly refused to target a specific oil price, and sources in the broader group told Reuters that plans to increase production in December do not represent any major change in existing policy.
“Overall, it is clear that the oil markets remain very cautious about the global oil balance in 2025 and what OPEC+ “should do”, and the recent bearish situation is emphasized by the record low total length of all ICE Brent futures contracts, “Analysts of FGE Energy told customers Thursday.
