SHAFAQNA – So much for that rally. Crude oil came under renewed selling pressure on Monday after a move by Saudi Arabia to cut December selling prices to customers in the US rattled the market.
After rising by as much as 0.6 per cent earlier in the day, Brent crude, the global benchmark for oil, fell 1.6 per cent to a four year low of $84.53 a barrel.
WTI crude prices suffered a similar reversal of fortunes, tumbling 2.2 per cent to $78.31 a barrel – a five and a half year low.
Saudi Aramco, the state-owned oil company, said in a statement on Monday that it would cut prices for all oil grades to customers in the US by between 45 to 50 cents.
Michael Loewen, an analyst at TD Securities, said:
The Saudi Arabia news today, is a continuation of theme of lots of supply. These guys are competing for market share.
Brent prices are down nearly 27 per cent since their mid-June high, while WTI prices are down over 27 per cent since their mid-June high.
An excess of oil supply, lacklustre demand, strong US dollar, and Saudi Arabia’s refusal to cut oil production have all weighed on the black stuff.
Saudi Arabia, which had previously played the role of swing producer, had more recently been willing to sacrifice higher price for market share.
Mr Loewen also pointed out that Alaskan North slope volumes, up 522,000 barrels a day on average in October, were bearish for the WTI market on Monday.