By Ahmad Ghaddar
LONDON (Reuters) -Oil prices slipped on Thursday, reversing earlier gains, on news that Saudi Arabia, the world’s top crude exporter, will give up on its price target in preparation for raising output.
Brent crude futures were down $1.27, or 1.7%, to $72.19 a barrel, while U.S. West Texas Intermediate crude fell $1.18, also 1.7%, to $68.51 per barrel as of 1023 GMT. Both contracts fell more than $2 a barrel earlier on Thursday.
Saudi Arabia is preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output, the Financial Times reported on Thursday, citing people familiar with the matter.
The Organization of the Petroleum Exporting Countries – led de facto by Riyadh – along with the group’s allies including Russia, together known as OPEC+, have been cutting oil output to support prices.
However, prices are down nearly 6% so far this year, amid increasing supply from other producers, especially the United States, as well as weak demand growth in China.
“The prospect of additional supply from Libya and Saudi Arabia has been the main driver behind the latest weakness,” Saxo Bank analyst Ole Hansen said.
A United Nations statement on Wednesday said delegates from divided Libya’s east and west agreed on the process of appointing a central bank governor, a step which could help resolve the crisis over control of the country’s oil revenue that has disrupted exports.
Libya’s crude exports have averaged about 400,000 barrels per day in September, down from over 1 million bpd in August, shipping data show.
News of a new Chinese stimulus package limited further losses, however.
Top government officials in China, the world’s largest crude oil importer, pledged on Thursday to deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5%, acknowledging new problems and raising market expectations for fresh stimulus in addition to measures announced this week.
(Additional reporting by Gabrielle Ng in Singapore and Katya Golubkova in Tokyo; Editing by Christian Schmollinger, Shri Navaratnam and Emelia Sithole-Matarise)
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