Oil prices took a tumble on Wednesday, with Brent crude futures dipping 0.72% to $73.20 and U.S. West Texas Intermediate crude futures falling 0.81% to $69.77. This downturn stemmed from news circulating among OPEC+ sources that the group is considering putting a hold on its planned output increase scheduled for October.
The decision comes amid growing concerns about global demand. Weak economic data from both the U.S. and China has fueled forecasts of a weakening global economy, leading to anxieties about diminished oil demand. This sentiment contributed to a broader sell-off in world markets, with Brent crude futures dropping as much as 11% in a week.
Adding to the downward pressure on prices, traders are anticipating a possible resolution to the dispute halting Libyan oil exports. This potential resumption of Libyan oil production would further increase supply, a factor that has raised concerns about market volatility following OPEC+’s planned output boost.
China’s manufacturing activity, as reported on Saturday, hit a six-month low in August, with growth in new home prices cooling off. Meanwhile, the Institute for Supply Management reported on Tuesday that U.S. manufacturing remained sluggish.
These developments have spurred OPEC+ to consider delaying the planned output increase, prompting a wave of downward movement in oil company stocks and exchange-traded funds that hold these stocks. Exxon Mobil Corporation saw a 0.62% decline, Chevron Corporation fell 0.82%, and Shell plc dropped 0.80%. Similarly, United States Oil Fund LP USO experienced a 1.31% slide, while ProShares Ultra Bloomberg Crude Oil UCO lost 2.33% and United States Brent Oil Fund LP BNO decreased 1.11%.
As the market digests these developments, investors will be closely watching upcoming reports from the American Petroleum Institute on Wednesday and the Energy Information Administration on Thursday for further insights into the oil market.
