Oil Prices Stabilize Amidst Mixed Signals

By Gabrielle Ng and Katya Golubkova

SINGAPORE (Reuters) – Oil prices were little changed on Thursday after falling in the previous session. Signs of firmer fuel demand and declining inventories in the U.S., the world’s top crude oil consumer, have offset worries about global demand prospects.

Brent crude futures rose by 6 cents, or 0.08%, to $73.52 a barrel, while U.S. West Texas Intermediate crude increased by 2 cents, or 0.03%, to $69.71 per barrel as of 0345 GMT.

Oil prices had slumped over 2% on Wednesday as concerns over supply disruptions in Libya eased, and demand worries persisted despite China’s recent stimulus plans. However, oil prices initially increased following the stimulus announcement from the world’s largest oil importer.

Tony Sycamore, market analyst at IG, stated, “With regards to China, beyond this week’s easing measures announced on Tuesday, fiscal stimulus is likely needed to enhance household consumption and revive dwindling market spirits.”

The anticipation of returning Libyan oil to the market has also contributed to pricing pressures. Delegates from Libya’s east and west have agreed on a process for appointing a central bank governor, which could help resolve the ongoing crisis affecting the country’s oil revenue and exports.

Despite stronger demand signals in the U.S., noted by ANZ Research, the market has remained cautious, as the Energy Information Administration (EIA) reported larger-than-expected declines in U.S. oil inventories last week. “Any revival in Libyan production would enter a market already grappling with weak demand concerns in the U.S. and China,” ANZ added.

On a positive note, weekly gasoline demand surged past 9 million barrels per day (bpd), according to EIA data, and distillate fuel supplies noted an increase to over 4 million bpd.

As the week progresses, Sycamore anticipates market focus shifting to month-end positioning. “Then it’s all about next Friday’s nonfarm payrolls, with attention also on the Middle East situation,” he mentioned.

A survey released on Tuesday indicated that U.S. consumer confidence dropped significantly in September, marking the steepest decline in three years amid increasing labor market anxieties. The U.S. nonfarm payrolls report is scheduled to be released on Oct. 4.

Recent discussions at the United Nations led the U.S., France, and several allies to call for an immediate 21-day ceasefire in the Israel-Lebanon conflict, while supporting a ceasefire in Gaza. This followed intensified airstrikes by Israel in Lebanon on Wednesday, resulting in at least 72 deaths, according to compilation data from Lebanese health ministry statements. The possibility of a ground assault was raised by Israel’s military chief, heightening fears of escalating conflict in this critical Middle Eastern oil-producing region.