Oil prices rose slightly on Thursday following two days of declines, driven by renewed concerns over potential supply disruptions in Libya and a smaller-than-expected reduction in U.S. crude inventories.
- Brent crude futures climbed 15 cents (or 0.19%) to $78.80 per barrel by 0605 GMT.
- U.S. West Texas Intermediate (WTI) crude futures increased 27 cents (or 0.36%) to $74.79 per barrel.
Both contracts had declined by over 1% on Wednesday after U.S. data showed a smaller-than-expected crude inventory draw of 846,000 barrels, bringing total inventories to 425.2 million barrels.
Key Factors Affecting Prices:
- Libya Supply Concerns:
- Some oilfields in Libya have halted production due to a conflict over control of the central bank, which has resulted in estimated output disruptions of 900,000 to 1 million barrels per day (bpd) for several weeks.
- Libya, a member of OPEC, had a production level of 1.18 million bpd in July.
- Analysts suggest that ongoing supply issues in Libya, amid broader geopolitical concerns, are likely to limit any significant decline in oil prices.
- Potential Impact on OPEC+ Production Plans:
- The duration of the supply disruption in Libya could affect OPEC+ production plans in October. If supply concerns persist, they could positively impact the oil markets by tightening the supply outlook.
- U.S. Inventory Data:
- The smaller-than-expected draw in U.S. crude inventories has dampened demand expectations slightly, balancing out some of the upward pressure from supply concerns.
Market Outlook: While supply concerns from Libya keep the market cautious, the smaller U.S. inventory draw may temper immediate bullish sentiment. The geopolitical dynamics in Libya will be closely watched, as extended disruptions could influence OPEC+ decisions and further impact global oil prices.
