Oil is steady but on track for a weekly decline on the prospect of firmer supply

By Paul Carsten

LONDON (Reuters) – Oil prices held steady on Friday but remained on track for a weekly decline as investors weighed expectations for increased production in Libya and the wider OPEC+ group against fresh stimulus from top importer China.

Brent crude futures were up 8 cents, or 0.1 percent, at $71.68 a barrel as of 08:40 GMT, while U.S. West Texas Intermediate crude futures were up 6 cents, also by 0.1%, up to $67.73.

On a weekly basis, Brent crude fell nearly 4%, while WTI was on track to lose nearly 6%.

“The recent decision by OPEC+ to increase production has only added to the sum,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, adding that the oil market has been dealing with falling demand over the past few months.

“While it is uncertain whether the Chinese stimulus will translate into higher fuel demand, it could still provide some respite to the oil market.”

China’s central bank cut interest rates on Friday and injected liquidity into the banking system, aiming to pull economic growth back to its target of around 5 percent for this year.

More fiscal measures are expected to be announced ahead of Chinese holidays starting on October 1, after a meeting of top Communist Party leaders showed a heightened sense of urgency about growing economic headwinds.

Meanwhile, rival factions vying for control of Libya’s Central Bank signed a deal to end their dispute on Thursday. The dispute has seen crude oil exports fall to 400,000 barrels per day (bpd) this month from more than 1 million barrels last month.

Separately, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, will continue with plans to increase output by 180,000 bpd each month starting in December.

A Financial Times report on Wednesday said the planned increase was due to Saudi Arabia’s decision to abandon its $100 oil price target and gain market share.

Saudi Arabia has repeatedly denied targeting a specific oil price, and sources in the wider group told Reuters that plans to increase output in December represented no major change from existing policy.

(Reporting by Gabrielle Ng in Singapore and Shariq Khan in New York; Editing by Sherry Jacob-Phillips and Jason Neely)