Oil Heads for Deep Weekly Loss on Prospects for Jump in Supply

(Bloomberg) — Oil extended a sharp two-day drop, putting prices on course for a substantial weekly decline, on prospects of more supply from OPEC members Saudi Arabia and Libya.

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Brent crude fell toward $71 a barrel and is more than 4% lower this week, with West Texas Intermediate above $67. Saudi Arabia was said to be committed to higher production, the Financial Times reported on Thursday. Rival Libyan factions agreed to appoint a new central bank governor, paving the way for resolving a row that’s slashed oil output.

Crude is on track for a second quarterly decline, with OPEC+’s plans to ease voluntary supply curbs, as well as top importer China’s tough economic outlook, weighing on futures. The Asian nation unveiled a slew of monetary and fiscal stimulus measures this week, aiding stocks as well as other commodities, but their effectiveness remains uncertain.

Futures have been whipsawed this week, with the swings in prices pushing a gauge of implied volatility for Brent higher. Options markets are now pricing in a lower risk of futures spiking, with the premium of bearish puts over bullish calls for Brent widening again on Thursday.

This week’s selloff has come despite still-elevated tensions in the Middle East. Israel has vowed to maintain its bombardment of Hezbollah targets in Lebanon indefinitely, undermining efforts to secure a cease-fire deal that would ease the risk of a regional war.

Elsewhere, storm Helene grew to a Category 4 hurricane as it neared Florida’s west coast. Forecasters expect severe rains and flash flooding, as well as widespread power outages.

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