Brent crude futures fell $3.49 to settle at $71.84 a barrel, a 4.63 percent loss, while U.S. West Texas Intermediate (WTI) crude futures fell $2.95 to settle at $68.06 a barrel, a 4.15 percent loss.
Oil prices slumped more than 4 percent on Monday, with Brent reaching a three-month low, as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers. Brent crude futures fell $3.49 to settle at $71.84 a barrel, a 4.63 percent loss, while U.S. West Texas Intermediate (WTI) crude futures fell $2.95 to settle at $68.06 a barrel, a 4.15 percent loss. Brent’s dive pushed it to a session low of $71.52 during the session, its lowest since mid-April.
Falling prices offset gains late last week caused by supply outages in Libya, a labor dispute in Norway and unrest in Iraq. Russia and other oil producers could raise output by 1 million barrels per day (bpd) or more if shortages hit the market, Russian Energy Minister Alexander Novak told reporters on Friday. Also weighing on futures were reports the United States could tap its Strategic Petroleum Reserve, which would add supply to the market.
Concerns over China’s second-quarter GDP growth also was negative for prices during Monday’s session. The country’s economy expanded at a slower pace as Beijing’s efforts to contain debt hurt activity, while June factory output growth weakened to a two-year low in a worrying sign for investment and exporters as a trade war with the United States intensified. “The GDP missing a little bit psychologically was a warning sign that China is doing OK now, but not quite as strong as expected,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Spotlight on supply
Production in Libya remained under threat. While its ports are reopening, output at Libya’s Sharara oilfield was expected to fall by at least 160,000 bpd after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday. On July 11, the NOC said four export terminals were being reopened after eastern factions handed over the ports, while a lengthy shutdown at El Feel oilfield in the southwest also ended. Two days later, output at the nearby 300,000 bpd Sharara was slashed.
In Norway, a strike by offshore oil and gas workers accelerated on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer. Two protesters in Iraq died on Sunday in clashes with security forces in the town of Samawa amid anger in southern cities over public services and corruption. Demonstrations have yet to affect crude production. U.S. Treasury Secretary Steven Mnuchin said Monday the United States’ aim was to squeeze Iranian oil exports “to zero.”
Mnuchin said Washington wanted to avoid disrupting markets and would in some cases consider waivers, but it had been made clear to allies it expects them to enforce sanctions against Iran. Mnuchin is expected to head to India to discuss sanctions; the country is a prominent importer of Iranian crude, but officials there have said it will reduce those purchases.