(Bloomberg) — Oil slipped for a second day, extending a bumpy run so far this month, with the market focusing on Libyan supplies, key technical indicators and US inventory data.
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West Texas Intermediate extended declines below $75 a barrel after a recent geopolitical-driven rally failed to push futures above the 200-day moving average, which is now serving as a ceiling for price gains.
Another weekly decline in US crude stockpiles failed to shake futures from their doldrums. Inventories declined 846,000 barrels last week, according to government figures. That was a smaller drop than the 3.4 million-barrel decline projected by the industry-funded American Petroleum Institute and larger than the 106,000-barrel reduction forecast by Bloomberg users.
Political risks in the Middle East and a threat to supply from Libya supported recent gains. The North African country’s output has fallen by almost half this week, and there’s a risk of almost 1 million barrels a day coming off the global market.
The outages in Libya have been countered by a broadly bearish undertone — leading top Wall Street banks including Goldman Sachs Group Inc. and Morgan Stanley to shave their price forecasts for next year.
Banks also flagged a dour outlook in China for some of their pessimism, as a wider economic malaise and a switch to electric vehicles dents fuel consumption in the biggest crude importer. In Europe, diesel demand is seen falling below pandemic-era levels on weak manufacturing and structural shifts in the region’s car fleet. There are also signs of weakness in the gasoline market.
Later this week, traders will be on the lookout for more US economic data, including figures on growth and employment, which may offer further hints on the outlook for monetary policy. Federal Reserve Chair Jerome Powell earlier gave indications that lower interest rates were on the horizon.
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