• Thursday, February 22, 2024
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BusinessDay

Libya flood drives oil to 10-month high, market awaits US inflation data

Oil output drop slows naira stability quest

The Libyan flood that has claimed over 2,000 lives and displaced more than 10,000 people may have been responsible for driving oil prices to nearing a 10-month high. This development adds to the concerns over Libyan production and OPEC+ supply cuts with global economic uncertainties.

On Wednesday, Brent crude futures increased by 17 cents to reach $92.23 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 21 cents to $89.05 per barrel.

Both benchmarks surged nearly 2 percent on Tuesday, marking their highest levels since November 2022.

Read also:Oil prices dip as demand concerns outweigh supply expectations

Factors supporting oil prices included a bullish demand outlook from OPEC, forecasts of declining global oil inventories, and Libya’s temporary halt in exports due to a storm.

An analyst from Rakuten Securities who spoke to Reuters said that the news of OPEC member Libya shutting down four of its eastern oil export terminals due to a deadly storm and flood that has claimed over 2,000 lives also added to the rise in oil prices.

However, OPEC, Russia, and allied producers known as OPEC+ have decided to keep supplies tight, especially as Saudi Arabia and Russia extended voluntary supply cuts to a combined 1.3 million bpd by year-end.

Furthermore, concerns over weaker Chinese demand continue to weigh on the market. Added to the above concerns, the market will await U.S. inflation data due today, with Reuters reporting that the consumer price index is expected to moderate to 4.3 percent year-on-year in August from a 4.7 percent gain in July.

Reuters added that investors will focus on whether a softer core inflation reading will be sufficient for the Federal Reserve to keep rates on hold into next year.