WTI Oil breaks below $69.50 due to potential resolution of Libyan dispute
- WTI price loses ground due to indications that a political dispute in Libya, may be coming to an end.
- Libya’s two legislative bodies agreed to jointly appoint a central bank governor, easing the conflict over Oil revenue.
- Oil prices fell as the Institute for Supply Management showed that US manufacturing remained sluggish.
West Texas Intermediate (WTI) oil prices fell for the second day in a row, trading around $69.40 per barrel during Wednesday’s Asian session. The reduction in crude oil prices is being driven by the anticipated resolution of a political disagreement that has halted Libyan supplies, as well as fears about declining global demand.
According to Reuters, Libya’s two parliamentary chambers agreed on Tuesday to appoint a central bank governor jointly, potentially resolving the recent debate over control of the country’s oil money. The prospective agreement to restore oil supply may bring more than 500,000 barrels per day back into the market.
Market mood was further affected by data from the Institute for Supply Management, which revealed that US manufacturing remained sluggish in August, despite a minor recovery from an eight-month low in July. The US ISM Manufacturing PMI increased to 47.2 in August from 46.8 in July, but fell short of market forecasts of 47.5. This is the 21st drop in US factory activity in the last 22 months.
China, the world’s largest crude importer, reported that manufacturing activity dropped to a six-month low in August, with factory gate prices falling considerably. This has pushed Chinese policymakers to move forward with plans to enhance household stimulus.
Furthermore, oil prices are under pressure as the Organization of Petroleum Exporting Countries and its Allies (OPEC+) prepares to boost production in the coming quarter. OPEC+ plans to increase oil output beginning in October. Eight OPEC+ members plan to increase production by 180,000 barrels per day (bpd) next month.
