Oil Prices Fall as Demand Concerns Overshadow Libyan Export Halt

FILE - The drilling rig of the Kingfisher oil field, operated by China National Offshore Oil Corporation (CNOOC), is seen on the shores of Lake Albert in the Kikuube district of western Uganda Tuesday, Jan. 24, 2023. (AP Photo/Hajarah Nalwadda, File)
FILE - The drilling rig of the Kingfisher oil field, operated by China National Offshore Oil Corporation (CNOOC), is seen on the shores of Lake Albert in the Kikuube district of western Uganda Tuesday, Jan. 24, 2023. (AP Photo/Hajarah Nalwadda, File)
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Oil Prices Fall as Demand Concerns Overshadow Libyan Export Halt

FILE - The drilling rig of the Kingfisher oil field, operated by China National Offshore Oil Corporation (CNOOC), is seen on the shores of Lake Albert in the Kikuube district of western Uganda Tuesday, Jan. 24, 2023. (AP Photo/Hajarah Nalwadda, File)
FILE - The drilling rig of the Kingfisher oil field, operated by China National Offshore Oil Corporation (CNOOC), is seen on the shores of Lake Albert in the Kikuube district of western Uganda Tuesday, Jan. 24, 2023. (AP Photo/Hajarah Nalwadda, File)

Brent oil prices fell on Tuesday as sluggish economic growth in China, the world's biggest crude importer, increased worries about demand that overshadowed the impact of the halt of production and exports from Libya.
Brent crude futures were down 17 cents, or 0.2%, to $77.35 a barrel by 0620 GMT, Reuters reported.
West Texas Intermediate crude futures, which did not settle on Monday because of the US Labor Day holiday, were up 50 cents, or 0.7%, at $74.05 a barrel.
"Oil remains under pressure given lingering Chinese demand concerns. Weaker-than-expected PMI data over the weekend would have done little to ease these worries," said Warren Patterson of ING, adding that demand jitters are offsetting the Libyan supply disruptions.
China's purchasing managers' index (PMI) hit a six-month low in August. On Monday, the country reported new export orders in July fell for first time in eight months, and new home prices grew in August at their weakest pace this year.
In Libya, oil exports at major ports were halted on Monday and production curtailed across the country, six engineers told Reuters, continuing a standoff between rival political factions over control of the central bank and oil revenue.
The country's National Oil Corp (NOC) declared force majeure on its El Feel oil field from Sept. 2. Total production had plunged to little more than 591,000 barrels per day (bpd) as of Aug. 28 from nearly 959,000 bpd on Aug. 26, NOC said. Production was at about 1.28 million bpd on July 20, the company said.
Still, some supply is set to return to the market as eight members of the Organization of the Petroleum Exporting Countries (OPEC) and affiliates, known as OPEC+, are scheduled to boost output by 180,000 bpd in October. The plan is likely to go ahead regardless of demand worries, according to industry sources.
OPEC planners may decide that the expected upcoming cuts in US interest rates and the Libyan outage provides space for the addition of more oil, RBC Capital analyst Helima Croft said in a note.
"In our view, a prolonged Libyan outage could support Brent prices" around $85 a barrel, even with additional supply coming onto the market in the fourth quarter, she said.



Israel Central Bank Holds Rates

The Bank of Israel building in Jerusalem. Reuters
The Bank of Israel building in Jerusalem. Reuters
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Israel Central Bank Holds Rates

The Bank of Israel building in Jerusalem. Reuters
The Bank of Israel building in Jerusalem. Reuters

The Bank of Israel kept interest rates unchanged on Wednesday for a sixth straight meeting, but raised the prospect of future rate increases should armed conflict on two fronts push inflation up more than expected.
The central bank - also worried about Israel's investor risk premium which has risen since the Gaza war began on Oct. 7 last year - left its benchmark rate at 4.50%.
"In view of the continuing war, the Monetary Committee’s policy is focusing on stabilizing the markets and reducing uncertainty, alongside price stability and supporting economic activity," the central bank said in a statement.
Policymakers expressed worries over rising inflation stemming largely from supply constraints related to the war with Hamas in Gaza and accelerating fighting with Hezbollah in Lebanon, saying the increase in the pace of inflation is broad, Reuters reported.
Israel's annual inflation rate rose to 3.6% in August from 3.2% in the previous month, moving further above the government's 1%-3% target range after falling as low as 2.5% in February.
Bank of Israel Governor Amir Yaron told a news conference after the decision that the future direction of interest rates was "data dependent.”
Prior to the war, rates - which rose rapidly in 2022 and 2023 - were expected to decline this year. The central bank had reduced its key rate by 25 basis points in January but it has been on hold since due to the war, rising inflation pressures, a widening budget deficit and the higher risk premium.
Some investors have begun to speculate that inflation will continue to rise and possibly push the central bank to raising rates again.
"If inflation rises at a faster rate than we predicted ... we can definitely raise the interest rate," Yaron said, noting the inflation rate is expected to gain in near term.
Yaron said the current level of rates is believed to be restrictive enough to ultimately bring inflation back to within its target.
He added that in the current period Israel's uncertainty is far greater than what the US and European central banks - which have started to loosen policy - are experiencing.
The decision to hold rates steady came despite the bank's research department slashing its forecast for Israeli economic growth this year to 0.5% from a previous estimate of 1.5%.
The economy grew an annualized 0.7% in the second quarter, slowing markedly from a 17.2% pace in the first quarter.
All 14 analysts polled by Reuters had expected no rates move on Wednesday.
The central bank's researchers raised their inflation forecast for the coming year to 3.2% from 3.0%, while the interest rate is projected at its current 4.5% level, rather than 4.25% predicted in July.
The staff raised their expectation for Israel's 2024 budget deficit to 7.2% of gross domestic product from 6.6% due to the extra funds needed to finance the military conflicts. They see a 4.9% of GDP deficit in 2025.
"Approval of a responsible budget for 2025 is an essential component in strengthening the international markets’ trust and maintaining the economy’s robustness," Yaron said.
The budget's passage has been delayed due to political infighting.
The rates decision was initially slated for Monday but was moved to not coincide with the Oct. 7 anniversary of the start of the Gaza war.