Oil prices dip as prospect of addl supply offsets Mideast fears

Oil prices edged lower on Tuesday as a stronger supply outlook and tepid global demand growth outweighed fears over escalating conflict in the Middle East and its impact on crude exports from the region, reports Reuters.

Brent crude futures for December delivery slipped by 49 cents, or 0.7 per cent, to $71.21 a barrel by 1117 GMT. US West Texas Intermediate (WTI) crude futures lost 55 cents, or 0.8 per cent, to $67.62.

Brent fell as much as 2.5 per cent earlier in the session and WTI crude plunged by 2.7 per cent before paring losses.

A panel of top ministers from the OPEC+ producer group meets on Oct. 2 to review the market, with no policy changes expected. Starting in December, the OPEC+ comprising the Organizations of the Petroleum Exporting Countries (OPEC) plus allies such as Russia is scheduled to raise output by 180,000 barrels per day (bpd) each month.

The possibility of Libyan oil output recovering also weighed on the market. Libya's eastern-based parliament agreed on Monday to approve the nomination of a new central bank governor, which could help to end a crisis that drastically reduced the country's oil output. "Opposing forces are keeping oil sideways trading for now," said UBS analyst Giovanni Staunovo, pointing to Chinese stimulus, US oil demand growth and slowing US crude supply growth on the positive side and a looming resumption of Libyan output on the negative side.

In China, manufacturing activity shrank sharply in September, a private sector survey showed on Monday.

Analysts say a slew of stimulus measures over the past week are likely to be enough to bring China's 2024 growth back to about 5 per cent after several months of below-forecast data cast doubts over that target, though the longer-term outlook remains little changed.

Israel began ground incursions in Lebanon on Tuesday, with its military saying troops had begun raids against Hezbollah targets in the border area.

The attacks follow Israel's killing on Friday of Hezbollah head Hassan Nasrallah and represent an escalation in a conflict that now threatens to suck in the United States and Iran.