LONDON: Brent oil prices declined 2% on Tuesday as sluggish economic growth in China, the world's biggest crude importer, increased demand concerns that overshadowed the impact of halted production and exports from Libya.
Brent crude futures fell by $1.65, or 2.1%, to $75.59 a barrel. West Texas Intermediate crude futures, which did not settle on Monday because of the US Labour Day holiday, were down $1.06, or 1.4%, at $72.11.
"The weaker than expected Chinese manufacturing PMI over the weekend likely exacerbated concerns about the Chinese economy's performance," said Charalampos Pissouros, senior investment analyst at brokerage XM.
"The Libya and Middle East stories are keeping a floor below prices, leaving the door open to a further recovery in the foreseeable future."
On Monday China reported new export orders fell for first time in eight months in July and that prices of new homes rose in August at their weakest pace this year.
In Libya, oil exports at major ports were halted on Monday and production curtailed across the country, six engineers said, continuing a standoff between rival political factions over control of the central bank and oil revenue.
So far there is limited upside support from large production disruptions in Libya, owing to the uncertainty over how long those outages might last, said UBS analyst Giovanni Staunovo.
Libya's National Oil Corp (NOC) declared force majeure on its El Feel oilfield from Sept 2.
Total production had plunged to little more than 591,000 barrels per day (bpd) as of Aug. 28 from nearly 959,000 bpd on Aug. 26, NOC said. Production was at about 1.28 million bpd on July 20, the company said.
Some supply is set to return to the market as eight members of Opec and affiliates, together known as Opec+, are scheduled to boost output by 180,000 bpd in October. The plan is likely to go ahead regardless of demand worries, industry sources said.
"It remains to be seen how low prices can go before Opec+ reacts, as most cartel members need prices above current levels to come close to balancing budgets," said Panmure Liberum analyst Ashley Kelty.
Continuing disruptions to supply flows from the Middle East are also supporting the market. Two oil tankers were attacked on Monday in the Red Sea off Yemen but did not sustain major damage. — Reuters
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