RoydadNaft – Oil prices fell on Wednesday , extending a plunge of more than 4 % the previous day and hovering at their lowest since December , on expectations that a political dispute halting Libyan exports could be resolved and concerns over sluggish global demand .

Brent crude futures for November fell 43 cents , or 0.6 % , to $ 73.32 by 0645 GMT , after the previous session ‘s fall of 4.9 % . U.S. West Texas Intermediate crude futures for October were down 49 cents , or 0.7 % , at $ 69.85 , after dropping 4.4 % on Tuesday .

Both contracts fell to their lowest since December on signs of a deal to resolve the political dispute between rival factions in Libya that cut output by about half and curbed exports .

“ Selling continued in Asia amid expectations of a potential deal to resolve the dispute in Libya , “ said Toshitaka Tazawa , an analyst at Fujitomi Securities Co Ltd .

“ The market remained under pressure also because of concerns over sluggish fuel demand following weak economic indicators from China and the United States . “

Libya ‘s two legislative bodies agreed on Tuesday to jointly appoint a central bank governor , potentially defusing the battle for control of oil revenue that set off the dispute .

Libyan oil exports at major ports were halted on Monday and production cut nationwide . Libya ‘s National Oil Corp ( NOC ) declared force majeure on its El Feel oilfield from Sept. 2 .

“ Easing political tension in Libya potentially seeing some supplies return and economic weakness in the world ‘s largest oil consumers , U.S. and China , serve as a confluence of headwinds for oil prices , “ said Yeap Jun Rong , a market strategist at IG .

“ The faster contraction in new orders and production , along with increasing prices , presented in the U.S. manufacturing PMI data seems to be renewing growth fears , which does not offer much reassurance around the oil demand outlook . “

Market sentiment weakened after Tuesday ‘s Institute for Supply Management data showing that U.S. manufacturing remained subdued , despite a modest improvement in August from an eight – month low in July .

In China , the world ‘s biggest importer of crude , recent data showed that manufacturing activity sank to a six – month low in August , when growth in new home prices slowed .

Weekly U.S. inventory data has been delayed by Monday ‘s Labor Day holiday . The report from the American Petroleum Institute is due at 4 : 30 p.m. EDT ( 2030 GMT ) on Wednesday and data from the Energy Information Administration will be published at 11 : 00 a.m. EDT ( 1500 GMT ) on Thursday .

U.S. crude oil and gasoline stockpiles were expected to have fallen last week , while distillate inventories probably rose , a preliminary Reuters poll showed on Tuesday .