Latest News

Oil costs fall as weak demand overshadows Libya blockade

Brent oil prices slid in Asian trade on Tuesday as concern about a slow economy in China reducing need exceeded the impact of a blockade of oil production centers in Libya.

Brent unrefined futures were down 37 cents, or 0.48%, to $ 77.15 a barrel by 0156 GMT.

U.S. West Texas Intermediate crude, which did not have a Monday settlement because of the U.S. Labour Day vacation, was 28 cents up from its Friday close of $73.55.

Oil remains under pressure given remaining Chinese demand concerns. Weaker than anticipated PMI data over the weekend would have actually done little to reduce these worries, stated Warren Patterson of ING.

China's purchasing managers' index (PMI) hit a six-month low in August. On Monday, China posted the very first decrease in new export orders in 8 months in July, and said brand-new home rates grew in August at their weakest speed this year.

These need jitters are clearly more than offsetting the supply disturbances from Libya, Patterson said.

The United Nations Assistance Mission in Libya stated it held talks on Monday to resolve a conflict over control of the main bank that activated a blockade of the nation's most valuable product, sending out oil production to less than half of its usual level.

Rival factions concluded a draft contract and intended to sign it on Tuesday, the UN said without offering additional information.

Oil exports at Libyan ports stayed stopped on Monday and production cut, 6 engineers informed Reuters.

Libya's National Oil Corp (NOC) said on Monday it had declared force majeure on its El Feel oil field from Sept. 2.

Overall production had plunged to little bit more than 591,000 bpd as of Aug. 28 from almost 959,000 bpd on Aug. 26, NOC stated. Production was at about 1.28 million barrels each day (bpd) on July 20.

Eight members of the Organization of the Petroleum Exporting Nations and affiliates, known as OPEC+, are arranged to enhance output by 180,000 bpd in October, a strategy market sources said is likely to proceed despite demand concerns.

There are ideas they will stick to their prepared increase, however much will depend upon how much more weak point we see in the market, stated ING's Patterson.

A Reuters survey on Monday found global oil output last month was up to its most affordable level since January.

Intensifying supply concern, two oil tankers were attacked on Monday in the Red Sea off Yemen however did not sustain significant damage. The Iran-backed Houthis claimed duty.

Also, Russia's Gazpromneft Moscow refinery suspended operations at one system for repair work. A fire broke out on Sunday after a drone strike at the plant, which processed 11.6 million tons of petroleum in 2015.

(source: Reuters)