08:48 AM EDT, 09/30/2024 (MT Newswires) -- Oil prices moved lower early on Monday as weak demand from China and concerns over rising supply offsets worries over a widening Middle East war as Israel steps up attacks on Lebanese militia groups.

West Texas Intermediate crude oil for November delivery was last seen down US$0.29 to US$67.89 per barrel, while December Brent oil, the global benchmark, was down US$0.45 to US$71.53.

The drop comes as China on Monday said its manufacturing sector continued to slow in September, restraining demand from the No.1 oil importer despite stimulus measures announced by the country's central bank last week. Rising supply from Libya as the country's two governments settled a dispute over governance of its central bank and additional barrels coming to the market in December as OPEC+ unwinds 2.2-million barrels per day of supply cuts is also weighing on the market.

"WTI lost 4% of its value last week and Brent descended 3.4%. The culprits are Saudi Arabia and the OPEC+ producer group. The kingdom, as first reported by the Financial Times, abandoned its unofficial price target of $100/bbl to regain its fair share of the market both from producers outside the group and from within. The most efficient way to do this is to stick with the plan of gradually unwinding 2.2 mbpd of production constraints over the course of one year beginning in December. It will ostensibly lead to a supply surplus in 2025," PVM Oil Associates noted.

The threat of a spreading Middle Eastern war is offering some support to oil prices after Israel killed Hassan Nasrallah, head of the Hezbollah militia, as are reports the country plans a ground invasion of Lebanon. Concerns Israel's actions will draw Iran into the conflict is heightening geopolitical risk, but its effect on the market is unclear.

"We suspect that some oil market participants will look past this escalation given that there still has not been a major physical supply disruption and Iran has not demonstrated any appetite to enter this nearly year-long conflict," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets noted.