Oil Prices Steady Amid Libyan Production Concerns

Oil prices steadied in Asian trade on Thursday after significant losses in the prior session due to signs of a potential pick-up in Libyan production.

However, prices have seen strong gains this week, particularly after China announced a series of stimulus measures aimed at boosting growth. Additionally, U.S. oil inventories shrank more than expected, indicating a tighter market outlook.

Brent oil futures expiring in November rose 0.1% to $73.51 a barrel, while West Texas Intermediate crude futures also rose 0.1% to $69.73 a barrel by 20:57 ET (00:57 GMT).

Both contracts experienced a 2% decline on Wednesday but have recorded strong gains over the past two weeks, rebounding from near three-year lows.

The oil market has also been influenced by escalating tensions in the Middle East, with Israel continuing its offensive against Hamas and Hezbollah. Furthermore, a significant interest rate cut by the Federal Reserve has bolstered sentiment regarding oil demand.

Libya Makes Progress Towards Resuming Production

Oil prices sharply declined on Wednesday following reports that delegates from Libya’s eastern and western factions had reached an agreement on appointing a new central bank governor. This development is expected to resolve a crisis that had resulted in the shutdown of much of the country’s oil production.

These disruptions had offline at least 1 million barrels per day, and any resumption in production could lead to a less tight market.

U.S. Inventories Shrink More Than Expected

Prices largely fell following data showing a larger-than-expected 4.47 million barrel draw in U.S. oil inventories. Gasoline and distillate inventories also decreased, signaling robust U.S. demand.

This draw occurred amid disruptions in U.S. oil production, particularly due to adverse weather conditions in the Gulf of Mexico. Production was halted due to a hurricane earlier in September and is expected to face additional disruptions as Hurricane Helene passes through the Gulf this week.