Oil prices rebound amid Libya supply concerns and global demand worries

On Wednesday, oil prices rebounded after a significant drop the previous day, which ended a three-day streak of gains. Investors are currently navigating between concerns regarding potential supply disruptions from Libya and the Middle East, alongside worries about global fuel demand. Brent crude futures increased by 0.31% to $79.80 a barrel, while U.S. West Texas Intermediate crude rose by 0.23% to $75.70. This rebound follows a decline of over 2% on Tuesday, which was influenced by low refinery profit margins and disappointing global consumption growth data. The market's recovery was bolstered by industry data indicating a decrease in U.S. oil and fuel inventories. Specifically, crude oil inventories fell by 3.407 million barrels in the week ending August 23, with gasoline and distillate inventories also experiencing declines. However, the ongoing geopolitical tensions, particularly in Libya, pose significant risks to supply. Approximately 1.2 million barrels per day of production may be affected due to a political dispute among rival factions. In Libya, several oilfields have halted output amid disputes over control of the central bank and oil revenue. Engineers reported that production was stopped at the southeastern Amal and Nafoora oilfields, while output was reduced at Abu Attifel. The Tripoli-based government and the National Oil Corp have yet to confirm these closures. Additionally, the conflict between Israel and Hamas continues to escalate, with fighting in the Gaza Strip and exchanges of fire along the Lebanese border. The lack of progress in ceasefire negotiations further complicates the situation, contributing to the overall uncertainty in the oil market.