Oil prices suffer hefty monthly loss after settling lower on fresh supply jitters

August 31, 2024 05:37 AM AEST | By Investing

Oil prices suffer hefty monthly loss after settling lower on fresh supply jitters

Oil prices in August losses

U.S. oil prices fell nearly 6% in August as increased fears of a global economic slowdown battered the outlook for demand.

OPEC cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year and lower expectations for demand from China.

As well as demand, supply concerns also weighed on sentiment amid fears that OPEC and its allies or OPEC+ could likely follow through on plans to begin boosting output in October.

Dollar strength adds to oil woes

A rebound in the dollar also weighed on oil prices as bets on larger September rate cut were cast aside after data showed that the Fed's preferred inflation measure slowed more than expected in July and consumer spending remained robust.

As oil is priced in dollars, as a stronger greenback tends to make oil more expensive and less attractive to foreign buyers.

About 30% of traders now expect a 50bps rate cut in September, compared with 37% last week, Investing.com's Fed Rate Monitor Tool showed.

Iraq production cuts, Libya shutdown underpin oil

Oil prices have been supported this week after Reuters reported that Iraq planned to reduce its oil production in September as part of a plan with the Organization of Petroleum Exporting Countries.

Iraq will cut output to between 3.85 million and 3.9 million barrels per day, after producing about 4.25 million bpd in July.

Production disruptions in Libya also persisted, with reports showing over half of the country’s oil output was taken offline this week amid a growing row over the leadership of the country’s central bank.

(Peter Nurse, Ambar Warrick contributed to this article.)

This article first appeared in Investing.com

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