Oil prices fell as data from China’s purchasing manager index revealed ongoing economic weakness. Brent futures closed 2.4% lower on the day, while the US benchmark West Texas Intermediate fell as well. The worldwide benchmark Brent crude price was $76.93 per barrel, while the American standard West Texas Intermediate (WTI) was $73.55 per barrel.
According to market observers, speculative positioning in the oil market is still limited due to demand concerns and uncertainties surrounding OPEC+ policies.
According to an ING report published on Monday, OPEC+ members are leaning toward sticking to their plan and progressively unwinding cuts beginning in October.
Given lingering demand concerns there had been a growing part of the market, analysts said who thought the group would delay any supply increases. The group may believe that supply disruptions from Libya provide an opportunity to increase supply.
Libyan supply disruptions continue as the country halted crude oil export on political reason. However, while output has been cut further in some fields, others are seeing production being restored. Three oil fields, including Sarir, Messla and Nafoura are restarting output.
‘It is not clear whether the resumption of operations at these fields signals progress in negotiations between Libya’s Western and Eastern governments.
“However, there are some suggestions that the restarting of these fields is to meet domestic demand rather than exports” ING commodities strategists Warren Patterson and Ewa Manthey said.
Bearish sentiment in the oil market has continued in early morning trading today. Chinese PMI data released over the weekend have raised further concern over demand. China’s manufacturing PMI came in at 49.1 for August, below the consensus of 49.5 and also the fourth consecutive month of contraction in manufacturing activity.
The number of oil rigs in the US remained unchanged this week, oilfield services company Baker Hughes data showed Friday. The number of oil rigs, an indicator of short-term production in the country, remained flat at 483 for the week ending August 30. The number of US oil rigs fell by 29 compared to one year ago.
