Investing.com-- As oil prices remain relatively unchanged in Asian trade on Friday, concerns over tighter supplies in Libya and Iraq persist while traders worry about a potential slowdown in demand, resulting in losses for the month of August.
Despite recent rebound from losses due to a production shutdown in Libya and reports of planned Iraqi production cuts, the outlook for supplies remains tight. Signs of U.S. economic resilience and expectations of interest rate cuts have supported prices, but fears of a cooling global oil demand as the summer season ends continue to weigh on the market. Weak economic data from China further fuels concerns of a slowdown in demand.
Brent crude futures expiring in October rose 0.2% to $80.08 a barrel, while WTI futures rose 0.1% to $75.98 a barrel by 22:03 (02:03 GMT).
Oil prices still set for August losses
Both Brent and WTI contracts are down between 1.7% to 2.5% in August, hitting seven-month lows earlier in the month amid fears of a global economic slowdown impacting demand. Although concerns have eased throughout the month, worries over slowing demand persist, especially with limited positive signals from major importer China.
However, a more positive outlook towards the U.S., the largest fuel consumer globally, has helped mitigate oil's losses. Expectations of interest rate cuts in September, following dovish signals from the Federal Reserve, have been a key driver in this trend. Additionally, upcoming inflation data from the Fed could provide further insight into U.S. rate movements.
Iraq production cuts, Libya shutdown underpin oil
Oil prices surged over 1% on Thursday after reports indicated that Iraq is planning to decrease its oil production in September as part of an agreement with OPEC. Iraq aims to reduce output to between 3.85 million and 3.9 million barrels per day, down from about 4.25 million bpd in July.
Meanwhile, production disruptions in Libya continue, with more than half of the country's oil output offline this week due to internal disputes over the leadership of the central bank.
Analysis:
In summary, oil prices are holding steady in Asian trade amid concerns over supply constraints in Libya and Iraq, while fears of a demand slowdown persist. Despite recent gains driven by production cuts and economic resilience in the U.S., worries about cooling global demand continue to impact the market. Investors should monitor developments in Iraq and Libya, as well as upcoming U.S. inflation data for further insights into oil price movements.