Lower Oil Demand Expected to Keep Price Down
While West Texas Intermediate and Brent crude benchmarks have enjoyed some small gains in recent days, the price is being held down by a stronger dollar, a slowing of demand in China and Europe, and an increase in Libyan output.
Earlier this week WTI prices hit their lowest level since January but were trading slightly up at around $93.37 per barrel towards the end of the week. Brent futures were also up trading at $100.79 a barrel having ranged between $100.40 and $100.94 in the last few days.
Oil prices were strengthened by the US manufacturing report, the Manufacturing PMI was 59.0 in August after construction spending increased in July. This was far above analysts’ expectations of a drop to 56.8.
However, there has been weak factory data out of China and Europe which has led to fears that the demand for oil will drop.
According to analysts the price of oil is currently mainly governed by demand as the supply is not being affected by any geopolitical events. Furthermore, output in Libya has risen to 710,000 barrels per day and Russia’ crude oil output rose by 1% in August which showed that despite tensions with the Ukraine, the supply of oil isn’t likely to diminish.