Oil Prices Back Below $70 Despite OPEC Rumors

Today crude Oil fell below $70 as political tensions in Libya head toward a resolution but jumped $2 on OPEC rumors, which have been erased now. Early in the Asian session, oil prices dropped below $70, extending Tuesday’s significant decline, with the market responding to expectations that the political conflict halting Libyan oil exports may soon be resolved, potentially increasing supply. In the European session we saw a bounce on rumors that OPEC+ might postpone the supply hike, sending WTI $2 higher, but oil is back below $70 now.

This is happening against a backdrop of growing concerns about weakening global demand, particularly due to economic slowdowns in the United States and China, the two largest oil consumers. According to Bloomberg this morning, OPEC+ is reportedly close to delaying the plan to increase output by 180,000 barrels per day (bpd) in October, although it seems odd that OPEC would show their intentions to reintroduce barrels on Friday, only to reverse the decision following a $7 drop in oil prices. This inconsistency adds to market uncertainty.

WTI Crude Oil Chart H4 – The Highs Keep Getting Lower

Besides that, the data from China indicates that the economy is not recovering despite government interventions, highlighting the country’s prolonged economic downturn. Similarly, the economic struggles in Europe and the United States persist, as reflected in the disappointing JOLTS job openings report, which suggests a weakening US labor market and contributes to lower oil demand forecasts. These factors together paint a bleak outlook for oil prices.

API Crude Oil Inventories

• Headline Crude: A larger-than-expected drawdown of -7.4 million barrels, compared to the forecast of -1.0 million barrels.
• Distillates: A slight increase of +0.4 million barrels, close to the expected rise of +0.5 million barrels.
• Gasoline: A smaller-than-anticipated drawdown of -0.3 million barrels, versus an expected decline of -0.7 million barrels.
• Cushing: Crude inventories at Cushing saw a drop of -0.8 million barrels.
• SPR (Strategic Petroleum Reserve): An increase of +1.8 million barrels.

US WTI Crude Oil Live Chart