2024-01-08 16:36:36
Oil prices fell at the beginning of weekly trading – today, Monday – by 2.6% compared to the close of the Friday session, amid weak global demand for crude.
Yesterday, Sunday, Saudi Aramco reduced the official selling price of its main Arab Light crude to a premium of $1.50 per barrel above the regional index for the month of February, compared to a premium of $3.5 for the current month, which is the lowest level since November 2021.
Aramco’s decision comes following weak spot price differences for Middle Eastern crudes, due to China’s weak appetite and increased global supplies, according to an analysis published by Bloomberg earlier today.
The decline in oil prices means that the deterioration in global demand expectations has outweighed fears of production disruption in Libya and the repercussions of tensions in the Red Sea.
By 11:46 GMT, futures prices for Brent crude for next March delivery fell by 2.6%, or $2.15, to $76.56 per barrel. The price of West Texas Intermediate crude fell by 1.5% to $72.74 per barrel for delivery next February.
The significant reduction in official oil prices by Saudi Arabia reinforced signs of weakness in the global oil demand market in major markets, led by China.
Saudi Arabia is the largest exporter of crude oil in the world with a daily average of 6.6 million barrels, compared to 7.5 million barrels per day in normal circumstances, but the Kingdom participates in the OPEC Plus alliance agreement to reduce production.
Last year, oil recorded its first annual loss since 2020 as production expanded from outside OPEC Plus and traders looked to slowing demand growth, including from the main importer (China).
Analysts at Wall Street investment banks expect continued unfavorable conditions in the oil market, which has led them to lower their price forecasts.
For his part, Warren Patterson, head of the commodities sector at the Dutch banking group ING, said, “Supply disruptions and tension in the Middle East still continue to provide some support to prices… In the absence of tensions in the Middle East, we doubt that a significant increase will occur.” In prices in light of the state of market equilibrium during the first half of 2024.”
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