Oil prices showed little movement on Friday amid ongoing worries about tightening supplies in Libya and Iraq, but they still faced losses for August as traders anticipated a potential slowdown in demand.
Crude prices recovered slightly this week after a production halt in Libya and announcements of planned production cuts in Iraq suggested a tighter supply situation. Additionally, signs of economic resilience in the U.S. and continued speculation about interest rate cuts supported prices.
Demand concerns amid economic signals
However, these gains were tempered by concerns that global oil demand may weaken as the busy summer travel season comes to a close. Weak economic data from China further fueled worries about a slowdown in the world’s largest oil importer.
Brent oil futures for October rose 0.2 percent to $80.08 a barrel, while West Texas Intermediate crude futures increased by 0.1 percent to $75.98 a barrel as of 22:03 (02:03 GMT).
Monthly performance overview
Despite these recent gains, both contracts were still down between 1.7 percent and 2.5 percent for August, having plummeted to seven-month lows earlier in the month due to heightened fears of a global economic slowdown affecting demand. Although these concerns largely subsided as the month progressed, anxieties about weakening demand persisted, particularly with limited positive signals from China.
U.S. economic sentiment and interest rates
Nevertheless, improved sentiment towards the U.S., the largest fuel consumer, helped mitigate oil’s losses. Anticipation of interest rate cuts in September was a significant factor driving this trend, following a series of dovish indications from the U.S. Federal Reserve.
Read more: Oil prices steady amid smaller U.S. inventory draw, Libya’s supply concerns
Upcoming economic indicators
The PCE price index data, which is the Fed’s preferred inflation measure, is scheduled for release later on Friday and could provide further insights into the direction of U.S. interest rates. Additionally, positive GDP data released on Thursday indicated that U.S. economic growth in the second quarter was much stronger than previously estimated.
Key factors supporting oil prices
Iraq’s planned production cuts and ongoing shutdowns in Libya have also played a crucial role in supporting oil prices. On Thursday, oil prices surged over 1 percent after Reuters reported Iraq’s intention to reduce its oil production in September as part of a strategy with the Organization of Petroleum Exporting Countries. Iraq plans to cut output to between 3.85 million and 3.9 million barrels per day, down from approximately 4.25 million bpd in July. Production disruptions in Libya continued, with reports indicating that more than half of the country’s oil output was offline this week due to escalating disputes over the leadership of its central bank.
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