Oil Plunges as Rising Supplies, Tepid Demand Intensify Gloom
Oil plummeted ââ-š¬Ã¢â‚¬ erasing its gains for the year ââ-š¬Ã¢â‚¬ after a prospective deal to restore supplies from Libya turned traders' attention back to concerns about tepid global demand for crude.
Global benchmark Brent dropped 4.9% to settle below $74 a barrel after earlier touching the lowest intraday price since mid-December 2023. The plunge came after a Libyan central banker said a deal that would revive the OPEC nation's output appears imminent.
With more than half a million barrels of Libyan crude possibly coming back into the market, the focus is once again on tepid global oil consumption. Economic concerns in key consumer countries ââ-š¬Ã¢â‚¬ including China and the US ââ-š¬Ã¢â‚¬ have weighed on sentiment in recent months, with only occasional geopolitical concerns and minor supply disruptions masking the angst. Looking ahead, the market is bracing for OPEC+ to gradually restore production, starting with 180,000 barrels of daily supplies within weeks.
The concerns about China have only grown louder in recent days after a drumbeat of economic data over the weekend raised doubts that the world's top crude importer may struggle to meet this year's economic growth target.
Options are signaling the market is now anticipating a lower risk of futures spiking. The bias toward puts in Brent's second-month options skew has deepened to the most bearish since early June as traders continue to protect against price drops.
The US, meanwhile, is laying the groundwork for new sanctions on Venezuelan government officials in response to Nicolás Maduro's disputed reelection, according to documents seen by Bloomberg. The measures target key leaders that the US says collaborated with Maduro to undermine the July 28 vote.
WTI for October delivery fell 4.4% from Friday's close to settle at $70.34 a barrel. Futures didn't settle Monday due to the Labor Day holiday. Brent for November settlement declined 4.9% to settle at $73.75 a barrel.
Source : Bloomberg
