U.S. Crude Oil Falls Below $75
Oil prices have dropped for the second consecutive day as the market continues to decline. Traders are no longer focusing on potential supply disruptions in Libya, which had caused a price increase earlier in the week. Instead, concerns about weak demand in China and the possibility of a larger economic slowdown are keeping oil prices from rising.
On Wednesday, U.S. crude oil prices dropped by more than 1%, closing below $75 per barrel. This decline follows earlier gains made earlier in the week when there were concerns about potential supply disruptions in Libya.
Amarpreet Singh, an energy analyst at Barclays, explained to clients that oil prices are staying steady despite ongoing risks like possible supply issues in Libya and high tensions in the Middle East. He noted that the reasons for this include weak demand in China, fears of a broader economic slowdown, and little indication that OPEC+ will change its plan to increase oil production in the fourth quarter.
U.S. crude oil prices had already fallen by over 2%.
Here are the closing energy prices for Wednesday:
- West Texas Intermediate (WTI): The October contract closed at $74.52 per barrel, down $1.01, or 1.34%. So far this year, U.S. oil has increased by 4%.
- Brent Crude: The October contract ended at $78.65 per barrel, down 90 cents, or 1.13%. Year to date, this global benchmark is up 2.1%.
- RBOB Gasoline: The September contract finished at $2.21 per gallon, down 3 cents, or 1.43%. Gasoline prices have risen by 5.3% this year.
- Natural Gas: The September contract was at $1.93 per thousand cubic feet, up more than 2 cents, or 1.37%. However, natural gas prices are down about 23% for the year.
In Libya, about 1.2 million barrels of oil per day are at risk due to a dispute between rival governments over the leadership of the country’s central bank. The eastern government in Benghazi threatened to shut down all oil production and exports, which initially caused oil prices to rise. However, crude oil futures have since fallen as it remains unclear how much of Libya’s oil supply is actually affected.
Some oilfields in Libya have stopped production, according to engineers, but the U.N.-recognized government in Tripoli and the national oil corporation have not confirmed these outages.
In the U.S., crude oil inventories decreased by 800,000 barrels for the week ending August 23. Gasoline stocks fell by 2.2 million barrels, while gasoline supplied to the market, which indicates demand, increased by 115,000 barrels per day.
Matt Smith, lead oil analyst for the Americas at Kpler, noted that despite strong refinery activity, gasoline inventories are decreasing due to higher demand as the summer driving season comes to an end. Gas stations are likely stocking up in preparation for the Labor Day weekend.
