Oil News: China Stimulus Uncertainty Fails to Lift Outlook as OPEC Supply Grows

Light Crude Oil Prices Edging Higher, but Supply Concerns Linger

Light crude oil futures showed marginal gains on Friday, trading within a tight range, with key levels in focus for traders. Prices hovered between $68.22 and $67.23, a retracement zone that will dictate the market’s closing direction. A push above $68.22 could signal bullish momentum, targeting the next resistance level near $69.79, while a drop below $67.23 could trigger a decline toward a critical low at $64.04.

At 11:21 GMT, Light Crude Oil futures are trading $67.88, up $0.21 or +0.31%.

Oil Set for Weekly Loss Amid Growing Supply Outlook

Despite Friday’s stability, crude oil prices remain poised for a significant weekly decline, weighed down by expectations of increased supply from Libya and the OPEC+ coalition. Brent crude is down roughly 4% for the week, with WTI facing a sharper 6% decline. Analysts attribute the bearish sentiment to growing production forecasts, especially after Libya resolved a political standoff that had crippled its oil exports.

Libya’s crude output had plummeted to 400,000 barrels per day (bpd) in September, down from over 1 million bpd in August, due to internal disputes over control of the Central Bank. A new agreement between rival factions is expected to restore up to 500,000 bpd of lost output, adding further pressure to global supply.

OPEC+ Production Cuts in Focus

The broader supply picture remains heavily influenced by OPEC+ decisions. The group, which has been cutting production by 5.86 million bpd, plans to roll back 180,000 bpd of those cuts by December.

Reports suggest that Saudi Arabia, OPEC’s dominant player, may be abandoning its informal $100 per barrel price target in favor of capturing market share. This shift has contributed to oil prices dropping by 3% midweek and sparked speculation about a brewing battle for market dominance. However, Saudi Arabia has officially denied targeting specific price levels.

China’s Economic Stimulus Adds Uncertainty

While the global supply outlook has dampened sentiment, there is cautious optimism from China, the world’s largest crude importer. The Chinese central bank lowered interest rates and injected liquidity into the banking sector on Friday, aiming to boost the country’s faltering economy.

With additional stimulus measures expected ahead of the October holiday, market watchers remain hopeful that this could support oil demand in the coming months. However, doubts linger about whether China’s efforts will be enough to offset the impact of rising oil supplies.

Market Forecast: Bearish Near-Term Outlook

In the near term, crude oil markets face a bearish outlook. While Chinese stimulus efforts offer potential upside, the combination of recovering Libyan output and OPEC+ adjustments are expected to keep a lid on prices.

Traders should watch for a decisive move below $67.23, which could lead to further declines toward $64.04, while resistance near $69.79 may prove challenging in the absence of stronger demand signals. For now, supply-side pressures seem to dominate the crude oil market.