2024-01-08 04:03:30
Oil prices fell more than 1% on Monday due to sharp price cuts by top exporter Saudi Arabia and increased production by OPEC, offsetting concerns over the escalation of geopolitical tensions in the Middle East.
Brent crude slipped 1.09%, or 86 cents, to $77.90 a barrel by 0344 GMT, while West Texas Intermediate oil futures lost 1.15%, or 85 cents, to 72 .96 dollars per barrel.
“Saudi Aramco reduced its February sales prices, reinforcing the weak demand thesis,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Rising supply and competition with rival producers prompted Saudi Arabia to cut the February official selling price (OSP) of its flagship product, Arab Light, to its lowest level in 27 month.
“If we just focus on the fundamentals, including rising inventories, rising OPEC/non-OPEC production and a lower-than-expected Saudi official selling price, it would be impossible to be anything but bearish on oil raw,” said IG analyst Tony Sycamore.
“However, this ignores the fact that geopolitical tensions in the Middle East are undeniably rising, which will limit downside risks.
Both contracts climbed more than 2% in the first week of 2024 following investors returned from vacation to focus on geopolitical risk in the Middle East following Yemeni Houthi attacks on ships at sea Red.
US Secretary of State Antony Blinken, who is in the Middle East this week, said the Gaza conflict might spread across the region if there is no concerted peace effort.
Israeli Prime Minister Benjamin Netanyahu has vowed to continue the war until Hamas is eliminated.
Organization of the Petroleum Exporting Countries (OPEC) output rose by 70,000 barrels per day (bpd) in December to 27.88 million bpd, offsetting upward pressure on prices from geopolitical concerns, according to a Archyde.com investigation.
“Red Sea tensions are the only counterbalance, albeit relatively small and intermittent, to crude prices that are succumbing to declines due to forecasts of slowing global demand and rising inventories,” said Mr. Hari of Vanda Insights.
Separately, in the United States, oil drilling rigs increased by one unit to 501 last week, Baker Hughes said in its weekly report.
JPMorgan predicts 26 oil rigs will be added this year, most of them in the Permian during the first half of the year. (Reporting by Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by Sonali Paul and Christopher Cushing)
1704689531
#Oil #Saudi #Arabia #price #cuts #offsetting #Middle #East #concerns #January #a.m
