Brent crude prices fell on Tuesday as an economic slowdown in China, the world’s largest crude importer, added to demand concerns that have overshadowed the impact of Libya’s production and export freezes.
Brent crude futures fell 17 cents, or 0.2%, to $77.35 a barrel by 0620 GMT.
WTI futures closed on Monday for the U.S. Labor Day holiday rose 50 cents, or 0.7%, to $74.05 a barrel.
Oil remains under pressure amid demand concerns in China. Over the weekend, weaker-than-expected purchasing managers’ index (PMI) data did little to ease those concerns, with demand jitters offsetting supply disruptions in Libya.
China’s purchasing managers’ index (PMI) hit a six-month low in August. On Monday, the country reported that new export orders in July fell for the first time in eight months and new home prices rose at their slowest pace this August.
In Libya, oil exports at major ports were halted on Monday and output was restricted across the country, continuing the fight between rival political factions over control of the central bank and oil revenue.
The country’s National Oil Company (NOC) declared force majeure at the El Feel oil field as of September 2. The NOC said total production fell from about 959,000 bpd on August 26 to just over 591,000 bpd as of August 28. The company said production was about 1.28 million bpd on July 20.
Still, some supply is set to return to the market as the eight members of the Organization of the Petroleum Exporting Countries (OPEC) and their affiliates, known as OPEC+, plan to increase output by 180,000 bpd in October. Industry sources say the plan is likely to continue despite demand concerns.
OPEC planners say impending cuts in U.S. interest rates and the Libya outage could provide room for more oil consumption.
A prolonged outage in Libya could support Brent prices around $85 a barrel, analysts say, even if additional supply comes to the market in the fourth quarter.
A survey on Monday found that OPEC’s oil output last month fell to its lowest level since January.
Continuing disruptions to supply flows from the Middle East also support the market.
Two oil tankers were attacked in the Red Sea off Yemen on Monday but suffered no major damage. The Iranian-backed Houthis, who have been attacking the ships in support of Hamas, which is fighting Israel in Gaza, claimed responsibility for the attack.
