By Gabrielle Ng and Shariq Khan
SINGAPORE (Reuters) – Oil prices pared losses on Friday and may head higher but remained on course for a weekly decline as investors weighed expectations for higher output from Libya and the broader OPEC+ group against new stimulus from top importer China.
Brent crude futures rose 15 cents, or 0.21%, to $71.75 a barrel, as of 0630 GMT, while U.S. West Texas Intermediate crude futures rose 18 cents, or 0.27% to $67.85.
On a weekly basis, Brent crude is down around 3.7%, while WTI was on track to fall almost 5.7%.
While investors across asset classes cheered after Chinese authorities finally introduced stronger stimulus measures, oil markets appear fixated on Libya and OPEC this week, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“OPEC+’s recent decision to ramp up production has only added to the gloom,” Sachdeva said, adding that the oil market has suffered from weakening demand in recent months.
“While it is uncertain whether China’s stimulus measures will translate into higher fuel demand, it could provide some respite for the oil market.”
China’s central bank cut interest rates and injected liquidity into the banking system on Friday, after Beijing launched a last-ditch stimulus push to return economic growth to its roughly 5% target for this year.
More fiscal measures are expected to be announced before the Chinese holidays starting October 1, after a meeting of top Communist Party leaders showed a greater sense of urgency over mounting economic headwinds.
Meanwhile, rival factions claiming control of Libya’s Central Bank signed an agreement on Thursday to end their dispute. The dispute had led to a sharp decline in the country’s oil production and exports, with crude oil exports falling to 400,000 barrels per day (bpd) this month, compared to more than 1 million barrels last month.
The deal would allow more than 500,000 barrels per day of Libyan supply to return to markets, ANZ Bank analyst Daniel Hynes said.
In addition, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, are currently cutting oil production by a total of 5.86 million barrels per day, but plan to implement 180,000 barrels per day of those cuts in December to be undone.
A media report on Wednesday claimed that the previously announced turnaround is due to Saudi Arabia’s decision to abandon a $100 oil price target and gain market share, causing oil prices to fall 3% in the previous session.
Saudi Arabia, OPEC+’s de facto leader, has repeatedly denied targeting a specific oil price, and sources from the broader group told Reuters that plans to increase production in December do not represent a major change from existing policy .
“Overall, it is clear that oil markets remain very cautious about global oil balances in 2025 and what OPEC+ ‘should do’, with the recent bearish mood underlined by the record low net duration of ICE Brent managed money contracts positioning. FGE Energy analysts told clients on Thursday.
(Reporting by Gabrielle Ng in Singapore and Shariq Khan in New York; Editing by Christian Schmollinger, Kim Coghill and Sherry Jacob-Phillips)
