Oil steady as Libyan supply woes counter modest US stock draw

Oil prices steadied on Thursday, after two losing sessions as supply concerns over Libya returned, while a smaller-than-expected draw in U.S. crude inventories sapped demand expectations.

Brent crude futures had edged up 3 cents, or 0.04%, to $78.68 a barrel by 1024 GMT, while U.S. West Texas Intermediate crude futures were up 15 cents, or 0.2%, at $74.67.

Both contracts lost more than 1% on Wednesday, after data showed U.S. crude inventories last week fell by 846,000 barrels to 425.2 million, smaller than the draw of 2.3 million expected by analysts in a Reuters poll.

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Worries over disruptions in supplies from Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), provided some price support, some analysts said.

The Libya supply issues, amid growing geopolitical concerns, will keep oil markets on edge, and are likely to limit the downside for prices, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.

Some oilfields in Libya have halted production amid a fight for control of the central bank, with one consulting firm estimating output disruptions of between 900,000 and 1 million barrels per day (bpd) for several weeks.

Libya’s July production was about 1.18 million bpd.

“A prolonged shutdown from Libya will give OPEC+ a bit more comfort in increasing supply in 4Q24 as currently planned,” ING analysts said in a client note.

The length of the supply disruption could have an effect on OPEC+ production plans in October, which in turn could push up oil prices if supply does not ease as expected.

“Traders are split on whether Libya’s exports halts will impact OPEC+ production plans…it remains to be seen if the policy is altered given the bearish demand outlook and fears over the global economy,” said Panmure Liberum analyst Ashley Kelty.

Expectations for the U.S. central bank to start cutting interest rates next month also supported oil prices. Federal Reserve Bank of Atlanta President Raphael Bostic said it may be time for cuts, with inflation down farther and unemployment up more than anticipated.