WTI edges lower to near $75.00 amid China demand concerns, as Libya supply risks might cap its downside
Key Points:
- WTI price loses ground near $75.15 in Thursday’s early Asian session.
- Soft demand in China weighs on the WTI price.
- The threat of supply disruptions in Libya and Middle East geopolitical risks might cap the downside.
The US crude oil benchmark, West Texas Intermediate (WTI), was trading around $75.15 on Thursday. The WTI price falls as investors get concerned about China’s slowing economic growth. However, oil supply uncertainties in the Middle East and Libya may help limit WTI losses.
The sluggish economy and declining oil demand in China heighten concerns about the world’s top oil importer, weighing on the WTI price. “Demand in China remains weak, and the expected second-half rebound has yet to show credible signs of commencing,” said Amarpreet Singh, an analyst at Barclays.
Last week, US crude oil stockpiles declined less than predicted. According to the Energy Information Administration (EIA), crude oil stockpiles in the United States fell by 0.846 million barrels to 425.2 million barrels in the week ending August 23, compared to a 4.649 million barrel decline the week before. The market consensus was that stockpiles will fall by 3.0 million barrels.
On the other hand, probable oil supply interruptions in Libya may limit the downside for the WTI price in the near term. UBS analyst Giovanni Staunovo stated that the Libyan interruptions should compress the oil market when genuine barrels are removed, but investors want to see a decline in Libyan crude exports first. Crude oil prices rose on Monday due to growing rivalry among competing administrations in Libya, which has Africa’s largest crude oil deposits.
