Oil futures: Crude off lows as OPEC+ agrees to delay output hikes
Quantum Commodity Intelligence – Crude oil futures were Thursday were cautiously higher on reports that OPEC+ was set to delay planned increases, having tested 16-month lows in the previous session as economic woes weighed on sentiment.
Front-month Novt24 ICE Brent futures were trading at $73.22/b (1550 GMT), compared to the day's low of £72.74/b and Wednesday's settle of $72.70/b.
At the same time Oct24 NYMEX WTI was trading at $69.68/b versus Wednesday's settle of $69.20/b.
Talks continued between senior OPEC+ ministers throughout Thursday as sentiment increasingly swayed towards deferring the planned 180,000 bpd hike in October, with further increases over the following 12 months.
Reports that OPEC+ had settled on a two-month deferral initially lifted prices by around $1/b, but the brief rally proved less than convincing.
Earlier Citi Group had cautioned that if OPEC+ does not further trim production, then average prices could drop to $60/b next year amid sluggish demand growth and increasing supplies non-OPEC+ producers.
A combination of a sluggish global economy weighing on oil demand, Libya's rival factions in talks to resolve the dispute that has paralyzed oil output and uncertainty over OPEC+ policy have all conspired to push prices to the lowest levels since May 2023.
"The sell-off was partly driven by a broader risk-off move with equities also coming under significant pressure. The potential for a return of Libyan supply would have only added further pressure," said ING bank, noting the rival governments are discussing a deal that could see oil production returning.
Latest indications suggested that Libya's rival parliaments have an outline agreement on how to choose a new central bank governor, but the oil shutdown is likely to continue until negotiators can thrash out a deal next week.
Slowdown
China missing GDP targets and Europe's tepid economy have weighed heavily on oil markets over the summer, while confidence in the US recovery has also been knocked by recent data.
"The fears of a US slowdown have been fuelled by weaker labour market data, particularly an increase in the US unemployment rate to 4.3% in July and a slowdown in non-farm payroll growth," said Danske Bank in its latest research note, although added it believes the risks of a recession are low.
Meanwhile, this week's delayed US inventory data from the American Petroleum Institute revealed a sharp drop in crude stockpiles of 7.4 barrels, beating expectations for a draw of around 1 million barrels and lending some early support for prices.
The API also calculated a 300,000-barrel drop in gasoline inventories, while distillates fell 400,000 barrels.
