Oil prices fell on Wednesday, extending more than 4% drop from a day earlier and trading at their lowest level since December. The decline came on hopes the political dispute that has held up Libyan exports could be resolved and worries about weak global demand.
November Brent crude futures were down 43 cents, or 0.6%, at $73.32 by 0645 GMT, after falling 4.9% in the previous session. WTI Crude futures for October fell 49 cents, or 0.7%, to $69.85 after falling 4.4% on Tuesday.
Both contracts fell to their lowest levels since December.
Selling continued in Asia amid expectations of a possible deal to resolve the Libya conflict. The market remained under pressure on concerns about weak fuel demand following weak economic indicators from China and the US.
Libya’s two legislatures agreed on Tuesday to appoint a joint central bank governor, potentially easing the struggle for control of oil revenue.
Oil exports were halted at Libya’s major ports on Monday and production was cut nationwide. Libya’s National Oil Corporation (NOC) declared force majeure at the El Feel oil field from September 2.
The easing of political tensions in Libya and the potential return of some supplies are a combination of headwinds against economic weakness in the US and China, the world’s largest oil consumers.
A faster contraction in new orders and production, and rising prices in the US manufacturing PMI, are renewing growth fears that provide little reassurance about the outlook for oil demand.
Market sentiment weakened after Institute for Supply Management data released on Tuesday showed US manufacturing remained sluggish despite a modest improvement in August from an eight-month low in July.
In China, the world’s largest importer of crude oil, the latest data showed manufacturing activity fell to a six-month low in August as growth in new home prices slowed.
Weekly U.S. inventory data was delayed on Monday because of the Labor Day holiday. The American Petroleum Institute’s (API) report is due on Wednesday at 2030 GMT, and the Energy Information Administration’s (EIA) data is due on Thursday at 1500 GMT.
U.S. crude oil and gasoline inventories were expected to fall last week, while distillate oil inventories were likely to rise, a preliminary survey showed.
