Oil Steadies as Falling Libyan Exports Offset Weak Chinese Data

By Bloomberg

Sep 16, 2024

image is BloomburgMedia_SJVMHET0AFB400_16-09-2024_06-00-09_638620416000000000.jpg

OILDALE, CA - AUGUST 10: Oil wells are among the thousands pumping the oil fields of California's southern Central Valley on August 10, 2004 in the town of Oildale, California. California?s Central Valley is one of the nation's most important agricultural and oil producing areas. Mass food production has brought heavy use of chemicals, including pesticides that have sickened hundreds of area workers and residents. In 2002, the last year for which numbers are available, 172 million pounds of pesticides were used on California fields sickening 478 people as airborne chemicals drifted 39 times, according to the state Department of Pesticide Regulation. On May 2, a crew of 100 workers was caught in a drift of pesticide near Arvin that made 19 of them sick, including a woman who was five months pregnant. This spring, state Sen. Dean Florez introduced a bill, the Pesticide Drift Exposure Response Act, to help pay for field workers' medical care. (Photo by David McNew/Getty Images)

(Bloomberg) -- Oil steadied after its first weekly gain in a month as a drop in Libyan exports was offset by signs an economic slump in China is deepening.

Brent futures traded near $72 a barrel, while West Texas Intermediate climbed toward $69. Libyan exports have declined markedly as United Nations-led talks failed to break an impasse over control of the central bank, which has spilled over into its oil industry.

Chinese data out over the weekend showed industrial output in the longest losing streak since 2021 and investment falling more than expected, with the official economic growth goal of 5% for this year looking increasingly out of reach. The worsening situation in the No. 1 crude importer — along with an increase in global supply — have pushed Brent down by around 17% this quarter to near the lowest since late 2021.

The weakness in Chinese demand “will likely persist until we see China look to defend” its growth target, said Vivek Dhar, an analyst at Commonwealth Bank of Australia. “This may be only a month away, just like we saw last year,” he said, referring to Beijing boosting the budget deficit last October.

Hedge funds, meanwhile, have turned net bearish on Brent for the first time in data going back to 2011. Still, some of those short positions were starting to be unwound as prices recovered on Wednesday and Thursday last week.

The market is also tracking Typhoon Bebinca, which made landfall near Shanghai. It’s the strongest storm to hit China’s financial capital and major shipping hub since 1949. Financial markets in the country are closed on Monday and Tuesday for a national holiday.

By Yongchang Chin