Oil Prices Steady as Libya Supply Concerns Ease and US Inventories Shrink

Oil Prices Steady Amid Market Shifts

Oil prices stabilized in Asian trading on Thursday following significant losses in the previous session, influenced by potential increases in Libyan production.

Despite the recent dip, prices have shown strong gains this week, particularly after China, the top importer, introduced various stimulus measures to bolster economic growth. Additionally, a larger-than-expected decrease in U.S. oil inventories has created a tighter market outlook.

Crude oil futures for November rose by 0.1% to $73.51 a barrel, while prices for a similar contract increased by 0.1% to $69.73 a barrel. Both contracts experienced a 2% decline on Wednesday but have demonstrated substantial growth over the past two weeks, recovering from near three-year lows.

The oil market has also been influenced by escalating tensions in the Middle East, particularly as Israel continues its military actions against Hamas and Hezbollah. Furthermore, a significant interest rate cut by the Federal Reserve has enhanced sentiment regarding oil demand.

Progress in Libyan Production Resumption

Oil prices experienced a sharp decline on Wednesday after reports revealed that delegates from Libya’s eastern and western factions had reached an agreement on appointing a new central bank governor. This decision is anticipated to address a crisis that had led to the shutdown of much of the country’s oil production.

Production disruptions have removed at least 1 million barrels per day from the market, and any revival in output is likely to reduce tight market conditions.

U.S. Oil Inventories Show Larger-Than-Expected Drop

Prices for crude oil largely fell in response to data indicating a more significant-than-forecasted draw of 4.47 million barrels in U.S. oil inventories. This reduction, along with declines in other inventories, suggests that domestic demand remains robust.

The draw in inventories coincided with disruptions in U.S. oil production, particularly due to adverse weather conditions in the Gulf of Mexico. Production in this region was impacted by a hurricane earlier in September and is expected to face additional challenges as Hurricane Helene approaches the Gulf this week.