Oil prices steady as supply concerns persist, set for August losses

Investing.com– Oil prices moved little in Asian trade on Friday amid persistent concerns over tighter supplies in Libya and Iraq, but were still nursing losses for August as traders feared a looming slowdown in demand. 

Crude prices rebounded from recent losses this week as a production shutdown in Libya, coupled with reports of planned Iraqi production cuts, presented a tighter outlook for supplies. 

Signs of U.S. economic resilience also aided prices, as did persistent bets on interest rate cuts.

But this was offset by fears that global oil demand will cool as the travel-heavy summer season comes to an end. Weak economic prints from China kept fears of a slowdown in the world’s biggest oil importer largely in play. 

Brent oil futures expiring in October rose 0.2% to $80.08 a barrel, while West Texas Intermediate crude futures rose 0.1% to $75.98 a barrel by 22:03 (02:03 GMT). 

Oil prices still set for August losses 

Both contracts were still down between 1.7% to 2.5% in August, having sunk to seven-month lows earlier in August as increased fears of a global economic slowdown battered the outlook for demand.

While these fears mostly eased through the month, concerns over slowing demand still lingered, especially amid few positive cues from top importer China. 

Still, improving sentiment towards the U.S., the world’s biggest fuel consumer, helped trim oil’s losses. The prospect of interest rate cuts in September was the biggest driver of this trend, following a string of dovish signals from the Federal Reserve.

PCE price index data- the Fed’s preferred inflation gauge- is due later on Friday and is set to offer more cues on the path of U.S. rates. 

Positive GDP data released on Thursday also showed U.S. economic growth remained much stronger than initially estimated in the second quarter.

Iraq production cuts, Libya shutdown underpin oil 

Oil prices jumped over 1% on Thursday after Reuters reported that Iraq planned to reduce its oil production in September as part of a plan with the Organization of Petroleum Exporting Countries.

Iraq will cut output to between 3.85 million and 3.9 million barrels per day, after producing about 4.25 million bpd in July.

Production disruptions in Libya also persisted, with reports showing over half of the country’s oil output was taken offline this week amid a growing row over the leadership of the country’s central bank.