HG MARKETS:

Oil prices are poised for a weekly decline as investors assess expectations for increased production from Libya and the broader OPEC+ alliance, alongside new stimulus measures from China, the world’s largest oil importer. The recent decision by OPEC+ to boost output has further dampened market sentiment, with the oil sector grappling with waning demand over the past few months. While the impact of Chinese stimulus on fuel demand remains uncertain, it could still provide some relief to the oil market. On Friday, China’s central bank cut interest rates and injected liquidity into the banking system, aiming to steer economic growth back towards the year’s target of approximately 5%.

Additional fiscal measures are expected to be unveiled ahead of China’s national holidays, which begin on Oct. 1. This follows a meeting of the Communist Party’s top leaders, which highlighted growing concern over the country’s economic challenges. Meanwhile, rival factions vying for control of Libya’s Central Bank reached an agreement on Thursday to resolve their conflict, which had led to a sharp drop in crude oil exports, from over 1 million barrels per day (bpd) last month to 400,000 bpd this month.

At the same time, rising U.S. crude exports are enhancing the importance of Gulf Coast price benchmarks and increasing trading volumes for Houston contracts, diminishing the influence of Cushing, Oklahoma, as a storage and pricing hub. Since WTI Midland crude oil began contributing to the dated Brent price assessment a year ago, U.S. oil exports have overshadowed Cushing’s role in the market. Cushing has been the delivery and pricing point for West Texas Intermediate (WTI) crude futures on the New York Mercantile Exchange (NYMEX) since 1983. The benchmark is still used to price key U.S. crude grades for physical delivery, trading at a differential to WTI.