Oil is shrinking after deep cuts in Saudi prices raised by demand

LONDON, Sept. 6 (Reuters) – Oil prices fell on Monday, widening losses after Saudi Arabia’s world’s largest exporter cut crude oil contract prices in Asia over the weekend, reflecting well-stocked global markets and concerns about demand prospects.

Brent crude futures fell 49 cents, up 0.67%, to $ 72.12 a barrel at 1042 GMT.

West Texas Intermediate U.S. crude in October stood at $ 68.82 a barrel, down 47 cents, or 0.68%. Both contracts fell above $ 1 in previous transactions.

State oil giant Saudi Aramco on Sunday notified customers in a statement that it will reduce October official selling prices (PSOs) of all grades of crude oil sold in Asia, its largest purchasing region, by at least $ 1. the barrel.

Price cuts were larger than expected, according to a survey by Asian Reuters refiners. Read more

“The reduction in Saudi PSOs in Asia has caused a brief downward pressure this morning, as the market is recovering,” Tamas Varga told PVM Oil Associates.

“The monthly EIA report (U.S. government data) to be released on Wednesday will be watched closely and, if demand estimates for this year’s and 2022’s balance remain strong, the market could easily move forward to to the maximum seen in July “.

World oil supply increases as the Organization of the Petroleum Exporting Countries and their allies, a grouping known as OPEC +, increases production by 400,000 barrels per day each month between August and December. Read more

“Given that OPEC + continues its plan to increase production on a monthly basis, despite weak data from China and the United States raising fears of a slowdown, and Saudi Arabia is looking for market share in the region, oil is likely to remain under pressure, ”said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA brokerage.

Falling crude futures added to Friday’s falls after a weaker-than-expected job report in the U.S. indicated an uneven economic recovery that could mean slower fuel demand during a resurgent pandemic. Read more

Losses were limited by concerns that US supply would continue to be limited in the wake of Hurricane Ida.

The U.S. government is releasing crude from strategic oil reserves as production on the U.S. Gulf Coast struggled to recover.

Some 1.7 million barrels of oil and 1.99 billion cubic feet of natural gas production remained offline, according to government data released Friday, while power shortages prevent some refineries from returning to power. work. Read more

The hurricane also led U.S. energy companies last week to reduce the number of oil and natural gas platforms operating for the first time in five weeks, Baker Hughes data showed Friday. The number of oil rigs fell more since June 2020.

Report by Florence Tan and Julia Payne; edited by Simon Cameron-Moore, Jason Neely and Louise Heavens

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