Oil prices gain as Libyan supply woes counter modest US stock draw

FE Team | Published: August 30, 2024 00:25:12

LONDON, Aug 29 (Reuters): Oil prices edged higher on Thursday, after two losing sessions, as concerns over Libyan supplies helped offset a smaller than expected draw in US crude inventories, which tempered demand expectations.
Brent crude futures were up 51 cents, or 0.7 per cent, to $79.16 a barrel at 1259 GMT, while US West Texas Intermediate crude futures were up 81 cents, or 0.8 per cent, at $75.13.
Both contracts lost more than 1 per cent on Wednesday, after data showed US crude inventories last week fell by 846,000 barrels to 425.2 million, smaller than the draw of 2.3 million expected by analysts in a Reuters poll.
Worries over disruptions in supplies from Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), provided some price support, some analysts said.
Some oilfields in Libya have halted production amid a fight for control of the central bank.
Production has fallen by about 700,000 barrels per day (bpd) already, according to Reuters calculations. Libya pumped about 1.18 million bpd in July.
The Libya supply issues, amid growing geopolitical concerns, will keep oil markets on edge, and are likely to limit the downside for prices, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
"A prolonged shutdown from Libya will give OPEC+ a bit more comfort in increasing supply in 4Q24 as currently planned," ING analysts said in a client note, referring to a group comprising OPEC and allies such as Russia.
The length of the supply disruption could have an effect on OPEC+ production plans in October, which in turn could push up oil prices if supply does not ease as expected.
"Traders are split on whether Libya's exports halts will impact OPEC+ production plans ... it remains to be seen if the policy is altered given the bearish demand outlook and fears over the global economy," said Panmure Liberum analyst Ashley Kelty.
Expectations for the US central bank to start cutting interest rates next month also supported oil prices. Federal Reserve Bank of Atlanta President Raphael Bostic said it may be time for cuts, with inflation down farther and unemployment up more than anticipated.