Brent crude futures for October delivery, which expire on Friday, settled $1.14 lower, or 1.43%, at $78.80 a barrel, marking a decline of 0.3% for the week and 2.4% for the month.
U.S. West Texas Intermediate crude futures settled down $2.36, or 3.11%, to $73.55, a drop of 1.7% in the week and a 3.6% decline in August.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is set to proceed with a planned oil output hike from October, as the Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand, six sources from the producer group said.
“OPEC+ talking about going ahead with tapering off production cuts was the headline that sunk us today,” said Phil Flynn, analyst with Price Futures Group.
Meanwhile, investors responded to new data that showed U.S. consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve next month.
Lower rates can boost economic growth and demand for oil
“That modest inflation increase could solidify that we will only get a quarter-percentage-point cut and those hoping for a half will have to wait,” said Price Futures Group’s Flynn.
Elsewhere, Libya’s National Oil Corporation said recent oilfield closures have caused the loss of approximately 63% of the country’s total oil production, as a conflict between rival eastern and western factions continues.
Production losses could reach between 900,000 and 1 million barrels per day (bpd) and last for several weeks, according to consulting firm Rapidan Energy Group.
Libya’s eastern-based government announced the closure of all oil fields on Monday, halting production and exports and driving oil to settle at a nearly week high on Aug. 26.
“It is interesting to see the shutdown of Libya’s crude oil production have such an impact on market prices one day and completely ignored the next,” said Tim Snyder, chief economist at Matador Economics.
“It looks to me right now there is a lot of negative inertia in the market pulling prices down,” Snyder added.
Iraqi supplies are also expected to shrink after the country’s output surpassed its OPEC+ quota, a source with direct knowledge of the matter said on Thursday.
Iraq plans to reduce its oil output to between 3.85 million and 3.9 million bpd next month.
In the U.S., the number of active oil rigs opening new tabs was unchanged at 483 this week but rose by one in August, Baker Hughes said.
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