WTI holds below $73.50 amid slow China demand, Libyan Exports halted
- WTI attracts some sellers near $73.30 in Tuesday’s early Asian session.
- China’s manufacturing activity slowed in August, weighing on the WTI price.
- Halted Libyan exports and higher Fed rate cut expectations might cap the WTI’s downside.
The US crude oil benchmark, West Texas Intermediate (WTI), was trading around $73.30 on Tuesday. Slowing factory activity in China in August puts some downward pressure on the WTI price. However, supply fears over Libya’s oil output may limit its downside.
The sluggish economy and declining oil demand in China heighten concerns about the world’s top oil importer, weighing on the WTI price. The National Bureau of Statistics said that China’s manufacturing sector saw a decline in August, reaching a six-month low. China’s official Manufacturing Purchasing Managers’ Index (PMI) fell to 49.1 in August, from 49.54 in the previous reading. The figure fell short of the market average of 49.5 for the reported month.
Libya’s oil production was halted nationwide on Monday due to continued clashes between rival factions after Muammar Gaddafi’s overthrow in 2011. The threat of oil supply disruptions may lend some support to WTI prices.
Bjarne Schieldrop, chief commodity analyst at SEB, stated, “The present disruptions in Libya’s oil output may allow for additional supply from OPEC+. However, these oscillations have been very regular in recent years, implying that any disruptions will most likely be brief, with press reports stating that signals for a restart of production have already been issued.”
Oil markets will take more clues from the August US ISM Manufacturing PMI survey, which is coming on Tuesday. Later this week, the US Nonfarm Payrolls (NFP) will steal the spotlight. This occurrence may provide some insight into the extent and timing of the US Federal Reserve’s (Fed) interest rate cuts this year. Lower interest rates often increase the WTI price by lowering the cost of borrowing, which can enhance economic activity and oil demand.