On Wednesday (September 4), during early Asian trading, US crude oil prices briefly fell below the $70 mark, hitting a low of $69.98 per barrel, marking the lowest point since January 3. The day before, oil prices plunged nearly 5%, reaching the lowest in almost nine months, as signs emerged that disruptions in Libyan oil production and exports might be resolved through an agreement.
Brent crude futures closed down $3.77, or 4.9%, at $73.75 per barrel, marking the lowest level since December 12. US crude futures fell $3.21, or 4.4%, closing at $70.34, also the lowest point since last December. Due to the Labor Day holiday in the US on Monday, there was no settlement trading in the US crude market.
Last week, Brent crude fell 0.3%, while US crude dropped 1.7%.
According to a statement signed by Libya's legislative representatives on Tuesday, these bodies have agreed to appoint a new central bank governor within 30 days following UN-hosted talks. Meanwhile, six engineers said that oil exports from Libya's main port were halted on Monday as the standoff over control of the central bank and oil revenues between political factions in the country continues. The Central Bank of Libya's governor said on Tuesday he is prepared to return from Turkey to take control of the bank again, and he believes oil supplies will resume soon.
Ole Hansen, an analyst at Saxo Bank, stated that speculation about reaching an agreement triggered market selling. Before the news of more Libyan supplies possibly returning to the market surfaced, oil prices had already declined amid market expectations that weak economic growth in the world's largest oil importer would lead to reduced demand.
On Monday, the major Asian economy released data showing new export orders in July fell for the first time in eight months, and the increase in new home prices in August was the lowest this year. US gasoline futures plummeted nearly 6%, hitting the lowest level since December 2021, mainly due to decreased demand for vehicle fuel as the summer driving season concluded. Additionally, weak August manufacturing PMI data and a severe drop in US stocks also pressured oil prices. Goldman Sachs pointed out that artificial intelligence might put pressure on oil prices by boosting supply over the next decade.
It is worth noting that because Monday was a US holiday, the API crude inventory data originally scheduled to be released early Wednesday morning Beijing time will be postponed to early Thursday morning, while the EIA crude inventory data will be delayed until midnight on Friday.
The market on that day is focused on the US July JOLTs job openings data, July factory orders monthly rate, the Fed's Beige Book on economic conditions, and the Bank of Canada's rate decision. Additionally, investors should closely monitor news related to geopolitical situations.
US manufacturing remained in contraction in August, and July construction spending also declined. A survey by the Institute for Supply Management (ISM) showed that manufacturing activity in August slightly improved but remained weak, with manufacturers still facing rising input costs amid weak demand.
Another report from the US Census Bureau showed that July construction spending decreased by 0.3% month-on-month, marking the lowest in 16 months. In the US stock market, on Tuesday, the first trading day in September, US stocks plunged, with the S&P 500, Nasdaq, and Dow Jones Industrial indices all posting their biggest single-day percentage declines since early August.
As the market awaits several labor market reports to be released soon, expectations for the Fed's September meeting have increased. According to the CME FedWatch Tool, the market estimates there is a 61% chance of a 25 basis point rate cut and a 39% chance of a 50 basis point cut.
Moreover, Boeing's stock price plummeted 7.3% after Wells Fargo downgraded its stock rating to "underperforming relative to peers." Goldman Sachs predicts that artificial intelligence could impact oil prices over the next decade by boosting oil supply.
Finally, Russia on Tuesday fired two ballistic missiles that hit a military academy in Ukraine, killing at least 50 people in the deadliest attack this year. US officials stated that the US is close to reaching an agreement to supply Ukraine with long-range cruise missiles to support its military operations.
As of 08:59 Beijing time, US crude was reported at $70.00 per barrel.
