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Oil Edges Up As Libyan Supply Woes Offset Lower-Than-Expected US Stock Draw

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant
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Oil Edges Up As Libyan Supply Woes Offset Lower-Than-Expected US Stock Draw

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, US, November 22, 2019. REUTERS/Angus Mordant

Oil prices edged up on Thursday after two sessions of losses, as supply concerns over Libya returned to focus, although countered by a smaller-than-expected draw in US crude inventories that sapped demand expectations.
Brent crude futures climbed 9 cents, or 0.11%, to stand at $78.74 a barrel by 0355 GMT, while US West Texas Intermediate crude futures were up 15 cents, or 0.2%, at $74.67.
Both contracts lost more than 1% on Wednesday, after data showed US crude inventories dropped 846,000 barrels to 425.2 million last week, missing analyst expectations in a Reuters poll for a draw of 2.3 million.
Worries over disruption in supplies from Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), were positive for the market, some analysts said.
The Libya woes, amid growing geopolitical concerns, will keep oil markets on edge, and are likely to limit downside to prices, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
Some oilfields in Libya have halted production amid a fight for control of the central bank, with one consulting firm estimating output disruptions of between 900,000 and 1 million barrels per day (bpd) for several weeks.
Libya's July production was about 1.18 million bpd.
The length of the supply disruption could have a spillover effect on OPEC+ production plans in the coming October, which in turn could impact oil markets positively if supply does not ease as expected.
"A prolonged shutdown from Libya will give OPEC+ a bit more comfort in increasing supply in 4Q24 as currently planned," ING analysts said in a client note, adding that a short disruption would make the cartel's decision tougher, however.
"Under this scenario, we believe they will be reluctant to bring additional supply to the market when there are still lingering demand concerns."
Expectations for the US central bank to start cutting interest rates next month also supported oil prices, with Federal Reserve Bank of Atlanta President Raphael Bostic saying it may be time for cuts, with inflation down farther and unemployment up more than anticipated.
Lower interest rates make borrowing cheaper, which could boost economic activity and increase demand for oil.

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Egypt Central Bank Expands Lending to Government, but Inflation Slows

FILE PHOTO: A general view of the new headquarters of Central Bank of Egypt, at the New Administrative Capital (NAC) east of Cairo, Egypt December 8, 2023. REUTERS/Amr Abdallah Dalsh/File Photo
FILE PHOTO: A general view of the new headquarters of Central Bank of Egypt, at the New Administrative Capital (NAC) east of Cairo, Egypt December 8, 2023. REUTERS/Amr Abdallah Dalsh/File Photo
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Egypt Central Bank Expands Lending to Government, but Inflation Slows

FILE PHOTO: A general view of the new headquarters of Central Bank of Egypt, at the New Administrative Capital (NAC) east of Cairo, Egypt December 8, 2023. REUTERS/Amr Abdallah Dalsh/File Photo
FILE PHOTO: A general view of the new headquarters of Central Bank of Egypt, at the New Administrative Capital (NAC) east of Cairo, Egypt December 8, 2023. REUTERS/Amr Abdallah Dalsh/File Photo

Lending to the government by Egypt's central bank continued to climb in the last fiscal year, according to the central bank's newly released annual budget, even as inflation has slid from an all-time peak in September.

Central bank figures show "M1" money supply, which includes domestic currency in circulation and demand deposits in Egyptian pounds, jumped by 31.1% in the year to end-June 2024, after growing 33.4% in the fiscal year to end-June 2023 and 23.1% in fiscal 2021/22.

The sharp acceleration in money supply growth has come during four years in which Egypt's underlying economic weaknesses have been exposed by a series of shocks including the COVID-19 pandemic and the war in Ukraine.

Headline inflation, however, declined from a record 38.0% in September to 25.7% in July, Reuters reported.

"If anything, M1 money supply in percent year-on-year terms has slowed from its peak of nearly 50% in February, which may be adding to the momentum of price changes (such as the decline in food inflation) in driving the headline rate of inflation in Egypt down over the course of this year," James Swanston of Capital Economics said.

As of the end of June, the central bank had 1.36 trillion Egyptian pounds outstanding in securities purchased from the finance ministry, up from 1.09 trillion a year earlier, according to its budget, released on Tuesday.

These included 940.3 billion pounds in local currency bonds purchased from the finance ministry as of end-June, up from 818.9 billion pounds in June 2023.

Egypt pledged to the International Monetary Fund in an $8 billion financial support agreement signed in March that it would reduce central bank lending to the government.

Egypt also promised that the central bank would stop sidestepping the finance ministry by lending hundreds of billions of pounds to other government agencies.

Such lending fell to 766.8 billion pounds as of end-June from 887.6 billion pounds a year earlier, according to the central bank budget.

Egypt pledged to the IMF in June that it would reduce such borrowing by other government agencies by 150 billion pounds by the end of June and by 100 billion pounds in subsequent years until it had fallen to zero.