SINGAPORE: Oil prices eased for a third day on Friday and were on track to fall for the week as investors focused on expectations of increased output from Libya and the broader OPEC+ group, although fresh stimulus from top importer China limited losses.
Brent crude futures fell 20 cents, or 0.28 percent, to $71.40 per barrel as of 7:33 a.m. Saudi time, while US West Texas Intermediate crude futures were down 14 cents, or 0.21 percent, to $67.53.
On a weekly basis, Brent crude was set to shed 4 percent, while WTI was on track to slide 6 percent.
Though investors across asset classes cheered after Chinese authorities finally released bolder stimulus, oil markets seem fixated on Libya and OPEC this week, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“The recent decision by OPEC+ to ramp up production has only added to the gloom,” said Sachdeva, adding that the oil market has been struggling with weakening demand over the past few months.
“While it’s uncertain whether Chinese stimulus will translate into higher fuel demand, it may still offer some respite to the oil market.”
China’s central bank on Friday lowered interest rates and injected liquidity into the banking system as Beijing ramps up stimulus to pull economic growth back toward this year’s roughly 5 percent target and fight deflationary pressures.
More fiscal measures are expected to be announced before China’s holidays starting on Oct. 1, after a meeting of the Communist Party’s top leaders showed an increased sense of urgency about mounting economic headwinds.
Meanwhile, rival factions staking claims for control of the Central Bank of Libya signed an agreement to end their dispute on Thursday. The dispute had caused a sharp reduction in oil production and exports in the country, with crude exports down to 400,000 barrel per day this month, from over 1 million barrels last month.
The agreement could see more than 500,000 bpd of Libyan supply return to markets, ANZ Bank analyst Daniel Hynes said.
Separately, OPEC and its allies, a group known as OPEC+, are currently cutting oil output by a total of 5.86 million bpd but plans to reverse 180,000 bpd of those cuts in December.
