2024/09/04

Decreased demand drives oil prices lower

Oil prices fell slightly on Tuesday, having declined by nearly 5% the previous day. The potential resolution of Libya's political turmoil shifted attention back to global demand concerns and OPEC+'s planned production increase in October.

Brent crude was trading near $74 per barrel, while West Texas Intermediate hovered just above $70. The Libyan Central Bank governor suggested a forthcoming agreement to end the country's internal conflict, potentially leading to resumed oil production.

Although Libya's unrest could have provided OPEC+ with more flexibility to increase production, the decision is likely to complicate efforts to raise output without impacting prices. The alliance has indicated a willingness to pause or reverse production increases if necessary.

The National Oil Corporation of Libya declared force majeure at the El Feel field due to an expanded production halt stemming from the ongoing power struggle. As a result, oil prices have erased all gains for the year, driven by concerns over China's economic outlook and ample global oil supplies.

Algorithmic trading may have played a role in the recent price decline, as automated systems often follow downward trends.