Oil extends drop on easing Libyan dispute, demand concerns
Shafaq News/Oil prices fell on Wednesday, extending a plunge of more than 4% the previousday, on expectations that a political dispute halting Libyan exports could beresolved and concerns over lower global demand growth.
Brent crudefutures for November fell 37 cents, or 0.5%, to $73.38 by 0330 GMT, after theprevious session's fall of 4.9%. U.S. West Texas Intermediate crude futures forOctober were down 41 cents, or 0.6%, at $69.93, after dropping 4.4% on Tuesday.
Bothcontracts fell to their lowest since December on signs of a deal to resolve thepolitical dispute between rival factions in Libya that cut output by about halfand curbed exports.
"Sellingcontinued in Asia amid expectations of a potential deal to resolve the disputein Libya," said Toshitaka Tazawa, an analyst at Fujitomi Securities CoLtd.
"Themarket remained under pressure also because of concerns over sluggish fueldemand following weak economic indicators from China and the UnitedStates."
Libya's twolegislative bodies agreed on Tuesday to jointly appoint a central bankgovernor, potentially defusing the battle for control of oil revenue that setoff the dispute.
Libyan oilexports at major ports were halted on Monday and production cut nationwide.Libya's National Oil Corp (NOC) declared force majeure on its El Feel oilfieldfrom Sept. 2.
"Easingpolitical tension in Libya potentially seeing some supplies return and economicweakness in the world's largest oil consumers, U.S. and China, serve as aconfluence of headwinds for oil prices," said Yeap Jun Rong, a marketstrategist at IG.
"Thefaster contraction in new orders and production, along with increasing prices,presented in the U.S. manufacturing PMI data seems to be renewing growth fears,which does not offer much reassurance around the oil demand outlook."
Marketsentiment weakened after Tuesday's Institute for Supply Management data showingthat U.S. manufacturing remained subdued, despite a modest improvement inAugust from an eight-month low in July.
In China,the world's biggest importer of crude, recent data showed that manufacturingactivity sank to a six-month low in August, when growth in new home pricesslowed.
Weekly U.S.inventory data has been delayed by Monday's Labor Day holiday. The report fromthe American Petroleum Institute is due at 4:30 p.m. EDT (2030 GMT) onWednesday and data from the Energy Information Administration will be publishedat 11:00 a.m. EDT (1500 GMT) on Thursday.
U.S. crudeoil and gasoline stockpiles were expected to have fallen last week, whiledistillate inventories probably rose, a preliminary Reuters poll showed onTuesday.
(Reuters)
