Oil prices steady as Libya supply concerns ease, US inventories shrink

Investing.com– Oil prices steadied in Asian trade on Thursday after clocking steep losses in the prior session on signs of a potential pick-up in Libyan production.

But prices were sitting on strong gains this week, especially after top importer China announced a string of stimulus measures aimed at shoring up growth. U.S. oil inventories also shrank more than expected, presenting a tight outlook for markets. 

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

Both contracts slid 2% on Wednesday, but were sitting on strong gains over the past two weeks, as they rebounded from near three-year lows. 

Oil was boosted by an escalation in tensions in the Middle East, as Israel kept up its offensive against Hamas and Hezbollah. A bumper interest rate cut by the Federal Reserve also boosted sentiment over oil demand. 

Libya makes progress towards resuming production

Oil prices fell sharply on Wednesday after reports said that delegates from Libya’s east and west factions had agreed over the process of appointing a new central bank governor- a move that is expected to resolve a crisis that saw most of the country’s oil production shut down. 

Production disruptions in the country had taken at least 1 million barrels per day of production offline, with any resumption in production likely to herald less tight markets. 

US inventories shrink more than expected

Oil prices largely fell past data showing a substantially bigger-than-expected, 4.47 million barrel (mb) draw in U.S. inventories.

Gasoline and distillate inventories also shrank, indicating that U.S. demand remained strong.

The draw came amid some disruptions in U.S. oil production, especially due to adverse weather conditions in the Gulf of Mexico. Production in the region was taken offline due to a hurricane earlier in September, and is expected to face further disruptions as Hurricane Helene passes through the Gulf this week.