Oil futures: Crude slumps to 2024 lows on Libyan deal reports
Quantum Commodity Intelligence - Crude oil futures Tuesday were sharply lower as concerns over sluggish demand growth offset events in Libya, while reports of a potential deal to settle the dispute between rival factions in the OPEC producer sent prices tumbling.
Front-month Novt24 ICE Brent futures were trading at $73.82/b (1830 GMT), compared to Monday's settle of $77.52/b and posting the lowest level since last December at $73.51/b.
At the same time Oct24 NYMEX WTI was trading at $70.36/b versus Friday's settle of $73.55/b. There was no formal settlement on Monday due to the US holiday.
Benchmarks had initially started the week lower amid reports that some Libyan production was restarted over the weekend, but the country's oil output remains severely curtailed.
Prices rebounded from lows after Libya's NOC declared force majeure on oil output from the El Feel production system, which typically produces 70,000-80,000 bpd.
According to Argus, Libya's production could have sunk to 300,000 bpd this week, down more than 70% from July levels, but prices came off again on reports that the two sides may be seeking a settlement.
But Bloomberg reported that the Libyan central banker at the heart of a battle between the rival governments said a deal looks imminent, saying there were "strong" indications political factions are nearing an agreement to overcome the current deadlock.
Concerns over sluggish demand growth from China and Europe also continue to weigh on sentiment, while recent US data has been, at best, mixed.
The latest blow for Europe came after German auto giant Volkswagen warned it was considering historic plant closures in a bid to save billions of euros, facing lower sales and higher energy costs.
Data also revealed sluggish manufacturing output from China, further dampening demand outlook for the world's largest crude importer.
This was followed up Tuesday as the US Manufacturing PMI fell to 47.9 from 49.6 in July, its first decline in seven months and missing the 48-point consensus, S&P Global said Tuesday.
Traders were also waiting for confirmation of reports that OPEC+ was set to ratify the 180,000 bpd planned output increase from October, although the lack of a formal decision so far could indicate the group is concerned over demand appetite.
Saudi Arabia is scheduled to release October OSPs on 5 September, followed by term allocations, which likely means OPEC+ will need to decide on output by then.
Physical
Disruptions in Libya continued to support the North Sea physical market, while WTI Midland was setting the Dated Brent assessment as the lowest of the basket grades.
The US export grade was heard offered in Monday's Platts MOC window at a premium of +$2.90/b versus the underlying Dated Brent swap on a CIF basis - or around +$1.90/b FOB equivalent.
"Lots of bearish talk and concerns, but physical signals are still tight. US oil inventories have been falling steadily and counter seasonally over the past 6 weeks and floating global crude stocks have fallen sharply," said Bjarne Schieldrop, chief commodities analyst at SEB.
