Oil prices fall as weak demand eclipses Libya blockade By Reuters

By Colleen Howe

BEIJING (Reuters) – Brent crude oil prices fell in Asian trade on Tuesday as concern that a sluggish economy in China will dampen demand outweighed the impact of a shutdown of oil production facilities in Libya.

Futures were down 37 cents, or 0.48 percent, at $77.15 a barrel by 0156 GMT.

U.S. West Texas Intermediate crude, which had no deal on Monday because of the U.S. Labor Day holiday, was up 28 cents from its Friday close of $73.55.

“Oil remains under pressure given lingering concerns about Chinese demand. Weaker-than-expected PMI data over the weekend would not have done much to ease these concerns,” said ING’s Warren Patterson.

China’s purchasing managers’ index (PMI) hit a six-month low in August. On Monday, China posted its first decline in new export orders in eight months in July and said new home prices rose in August at the slowest pace this year.

“These jitters in demand clearly more than offset supply disruptions in Libya,” Patterson said.

The United Nations Support Mission in Libya said it held talks on Monday to resolve a dispute over control of the central bank that has triggered a blockade of the country’s most valuable commodity, driving oil output to less than half its usual level .

The rival factions have finalized a draft agreement and aim to sign it on Tuesday, the UN said without giving further details.

Oil exports to Libyan ports remained halted on Monday and output was reduced, six engineers told Reuters.

Libya’s National Oil Corp (NOC) said on Monday that it had declared force majeure at its El Feel oil field as of September 2.

Total output fell to just over 591,000 bpd on Aug. 28 from nearly 959,000 bpd on Aug. 26, NOC said. Production was about 1.28 million barrels per day (bpd) on July 20.

Eight members of the Organization of the Petroleum Exporting Countries and its affiliates, known as OPEC+, are scheduled to increase production by 180,000 bpd in October, a plan that industry sources say is likely to go ahead regardless of concerns about demand .

“There are suggestions that they will hold to their planned growth, however much will depend on how much more weakness we see in the market,” ING’s Patterson said.

A Reuters poll on Monday found that global oil production last month fell to the lowest level since January.

Exacerbating supply concerns, two oil tankers were attacked in the Red Sea near Yemen on Monday but suffered no major damage. The Iran-backed Houthis claimed responsibility.

Russian refiner Gazpromneft Moscow also suspended operations at a facility for repairs. A fire broke out on Sunday after a drone struck the plant, which processed 11.6 million tonnes last year.