By Arunima Kumar
(Reuters) -Brent oil prices declined on Tuesday as sluggish economic growth in China, the world’s biggest crude importer, increased demand concerns while a halt to Libyan production and exports provided a floor.
Brent crude futures fell 92 cents, or 1.2%, to $76.62 a barrel by 0814 GMT.
West Texas Intermediate crude futures, which did not settle on Monday because of the U.S. Labour Day holiday, were down 25 cents, or 0.3%, at $73.30.
“The weaker than expected Chinese manufacturing PMI over the weekend likely exacerbated concerns about the Chinese economy’s performance,” said Charalampos Pissouros, senior investment analyst at brokerage XM
“The Libya and Middle East stories are keeping a floor below prices, leaving the door open to a further recovery in the foreseeable future.”
On Monday China reported new export orders fell for first time in eight months in July and that prices of new homes rose in August at their weakest pace this year.
In Libya, oil exports at major ports were halted on Monday and production curtailed across the country, six engineers told Reuters, continuing a standoff between rival political factions over control of the central bank and oil revenue.
So far there is limited upside support from large production disruptions in Libya, owing to the uncertainty over how long those outages might last, said UBS analyst Giovanni Staunovo.
Libya’s National Oil Corp (NOC) declared force majeure on its El Feel oilfield from Sept. 2.
Total production had plunged to little more than 591,000 barrels per day (bpd) as of Aug. 28 from nearly 959,000 bpd on Aug. 26, NOC said. Production was at about 1.28 million bpd on July 20, the company said.
Some supply is set to return to the market as eight members of OPEC and affiliates, together known as OPEC+, are scheduled to boost output by 180,000 bpd in October. The plan is likely to go ahead regardless of demand worries, industry sources said.
A prolonged Libyan outage could support Brent prices in the mid-$80s even with additional supply coming on the market in the fourth quarter, RBC Capital analyst Helima Croft said in a note.
Continuing disruptions to supply flows from the Middle East are also supporting the market. Two oil tankers were attacked on Monday in the Red Sea off Yemen but did not sustain major damage.
This post is originally published on INVESTING.
