Crude Futures Fall Over $1 Per Barrel Amid Demand Concerns
Crude oil futures fell by more than $1 per barrel on Wednesday in volatile trading, as concerns about weakening global demand overshadowed mixed signals from crude producers regarding potential supply increases.
Brent crude futures dropped $1.05, or 1.42%, settling at $72.70 per barrel, while U.S. West Texas Intermediate (WTI) crude fell by $1.14, or 1.62%, closing at $69.20 per barrel. Both benchmarks experienced swings of $1 in either direction during the session, as traders reacted to reports that OPEC+ was considering postponing a planned production increase in response to rising Libyan output.
In recent weeks, Brent crude has experienced a sharp decline, plummeting by as much as 11%—or $9 per barrel—in just over a week. This sell-off saw Brent hitting a low of $72.63 on Wednesday, reflecting broader concerns across global markets.
Weak economic data from the U.S. and China further fueled worries about declining demand for oil. China, the world’s largest crude importer, reported a slowdown in manufacturing activity, hitting a six-month low in August, alongside a dip in new home price growth. In the U.S., the Institute for Supply Management reported subdued manufacturing levels, adding to concerns about a sluggish global economy.
Phil Flynn, a senior analyst at Price Futures Group, highlighted that fears of a manufacturing slowdown were driving much of the market pessimism. “It’s definitely worries about a slowdown in manufacturing. That’s the only negative we’re seeing,” Flynn said.
Simultaneously, news emerged that a resolution may be on the horizon for the dispute that has halted Libyan oil exports, which could bring additional supply back to the market. This potential increase in supply shifted market attention to OPEC+’s response, which had initially aimed to begin output hikes in October.
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“The sell-off has put the focus on OPEC+’s potential response, and while the group seemed poised to implement planned output hikes, they are now concerned about pricing,” said Alex Hodes, an analyst at StoneX. Sources indicate that a delay in these hikes is now under discussion.
Traders also awaited the delayed U.S. oil inventory reports, with data from the American Petroleum Institute (API) expected later on Wednesday and the U.S. Energy Information Administration (EIA) set to release figures on Thursday. A preliminary Reuters poll indicated that U.S. crude and gasoline stockpiles were expected to have fallen in the past week.
While market sentiment remained bearish due to demand concerns, Flynn noted that changes in supply could swiftly alter the outlook. “We could flip on a dime. It could very easily turn positive, especially with a decent crude draw later today,” he said.
