Oil prices traded lower on Thursday, following a sharp drop in the previous session amid ongoing demand worries.
By 2:50 pm AEST (4:50 am GMT) brent crude futures fell 20 cents or 0.3% to $73.29 a barrel, while U.S. West Texas Intermediate (WTI) crude lost 18 cents or 0.3%, to $69.51 per barrel.
On Wednesday, oil prices tumbled over 2%, primarily due to easing concerns about supply disruptions in Libya and ongoing demand worries, despite China’s recently announced stimulus measures.
Prices had initially risen on news of China's economic support, given the country’s status as the world's largest oil importer.
The return of Libyan oil exports has also pressured prices. Libyan delegates from opposing factions agreed on a process to appoint a central bank governor, potentially resolving the crisis over oil revenues that has disrupted exports.
Despite these developments, stronger U.S. demand data provided some relief to the market, as the Energy Information Administration (EIA) reported a larger-than-expected drop in U.S. oil inventories last week.
The EIA data showed U.S. gasoline demand exceeding 9 million barrels per day (bpd) last week, while distillate fuel consumption climbed to over 4 million bpd.
For the remainder of the week, market attention is expected to shift to month-end positioning and next Friday's U.S. nonfarm payrolls report, which is closely watched by traders.
In the U.S., consumer confidence saw its sharpest decline in three years in September, amid increasing concerns about the labor market.
Meanwhile, geopolitical tensions continue to simmer in the Middle East. The U.S., France, and several allies called for a 21-day ceasefire along the Israel-Lebanon border, following intense discussions at the United Nations.
Israel expanded airstrikes in Lebanon on Wednesday, with reports indicating at least 72 fatalities.
The Israeli military has also signaled the possibility of a ground assault, raising concerns about a broader conflict in the oil-rich region.