Oil prices displayed significant losses yesterday following news of a rise in supply in Libya and concerns regarding the trade dispute between the US and China.
Brent crude fell by 6.9% which represents the biggest loss for over two years, with the contract falling as low as $73.4/b. Meanwhile, US crude decreased by 5% to $70.38/b, its largest within day loss in a year.
The trend before yesterday’s session was extremely bullish, with prices reaching their highest levels for a number of years. However, some resistance was provided in recent weeks by the threats made in the US in regards to imposing fresh sanctions on Iran.
The sharp drop in prices during Wednesday’s session was sparked by announcement made by the Libyan National Oil Corporation which stated that it would reopen 4 of its export terminals which have been closed since the end of the June, halting the majority of the country’s output.
Meanwhile, a report from the US announced that American crude oil stocks decreased by 12 million barrels last week which is 4% below the seasonal average, although this failed to have any impact on oil contracts.
President of OPEC, Suhail Al-Mazrouei has not welcomed the current price volatility and said: "Fluctuation is not good and we do not like to see lots of fluctuation in the prices."
There are also concerns amongst leading economists that the on-going trade war between the US and China could impact the global economy and lower demand.
A list of US products worth $200bn was revealed on Tuesday which will have a 10% tariff imposed on them, with similar measures expected to be taken by China. As it stands, the impact of these tariffs is not significant but if the situation is not resolved between the world’s two major oil importers, the implications for the global market could be severe.