Investing.com – U.S. oil futures moved lower on Wednesday despite hopes that a group of major producers will continue to tighten supply to offset concerns about demand growth.
At 7:30 PM EST (1:30 PM GMT), crude futures fell 1.6% to $69.20 per barrel and were down 1.4% to $72.70 per barrel.
OPEC+ may postpone the planned production increase
The Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, is discussing a postponement of a planned production increase next month, Reuters reported earlier Wednesday, citing sources from the producer group.
Eight OPEC+ members will increase production by 180,000 barrels per day (bpd) in October as part of a plan to phase out their latest production cuts of 2.2 million barrels per day.
Market volatility due to the closure of oil facilities in Libya and weak demand prospects have raised concerns within the group, according to the report, with one source saying a postponement appears “very possible” at this stage.
Possible end to a dispute in Libya
Both benchmarks fell more than 4% in the previous session, falling to their lowest levels since mid-December, following news of a possible resolution of a dispute in Libya that has caused a freeze in the country’s crude production and exports.
Libya’s legislature has reportedly agreed to appoint a new central bank governor within 30 days, following United Nations-sponsored discussions.
Tuesday’s announcement raised hopes of an end to the political deadlock that has severely disrupted Libyan oil exports.
On Monday, major Libyan ports halted oil exports and production was halted across the country due to a standoff between rival factions battling for control of the central bank and access to oil revenues.
The impact of the dispute on Libyan oil production is significant. The National Oil Corporation (NOC) reported that total production fell dramatically to just over 591,000 barrels per day on August 28, compared to almost 959,000 barrels per day two days earlier, according to Reuters.
This marked a significant drop from around 1.28 million on July 20, indicating the severity of production cuts.
Concerns about demand growth weigh heavily
Sentiment was also affected on Tuesday by the release of weak data on US manufacturing activity, raising fears that the world’s largest economy was heading for a hard landing and possible recession.
Concerns about economic slowdowns in China, Europe and the US have been weighing on the crude oil market for some time. Some traders are concerned that central banks, especially the Federal Reserve, have kept interest rates at high levels for too long in their attempts to overcome inflation.
Weekly U.S. inventory data has been delayed due to Monday’s Labor Day holiday. The American Petroleum Institute report is expected later in the session, while data from the Energy Information Administration will be released Thursday.
