MW: Oil extends losses after Saudi Arabia cuts prices for U.S., Asia buyers
Crude-oil futures fell Friday, extending overnight losses after Saudi Arabia cut January prices for U.S. and Asian buyers.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $66.28 a barrel CLF5, -0.75% down $0.53, or 0.8%, in the Globex electronic session. January Brent crude LCOF5, -0.80% on London’s ICE Futures exchange fell $0.53, or 0.7%, to $69.15 a barrel.
Brent crude, which settled at its lowest since May 25, 2010, in the previous trading session, has plunged by around 40% since June.
Saudi Arabian Oil Co., also known as Saudi Aramco, Thursday reduced its official selling prices for all oil grades bound for Asia in January by between $1.50 and $1.90 a barrel, compared with December. It also cut prices for all crude grades to the U.S. by between 10 cents and 90 cents a barrel.
Oil markets have recently been interpreting Saudi Arabia’s monthly price adjustments as signs of the oil producer’s intent to retain market share through a price war rather than adjusting export volumes.
Oil production from members of the Organization of the Petroleum Exporting Countries is already slightly lower, with early data for November showing a fall of 300,000 to 400,000 barrels a day mostly due to weaker output in Libya, analyst Tim Evans at Citi Futures said in a report.
Watch for more cuts from other OPEC countries OPEC’s production is probably lower due to difficulty in selling the crude, but total output still remains above the 30 million-barrel-a-day ceiling, which is a surplus for global markets, Evans said.
Scheduled oil shipments from OPEC for the four weeks ending Dec. 20 are 170,000 barrels a day lower than a month earlier at 23.41 million barrels day, according to tanker tracker data from Oil Movements.
Saudi Aramco’s price cuts will likely cause oil prices to extend declines Friday as other OPEC countries follow suit, said Daniel Ang, an analyst at Singapore’s Phillip Futures. Brent crude is expected to trend toward support at $67.53 a barrel, he said.
Markets are looking to U.S. non-farm payroll data due later Friday for further cues. Another 400,000-plus payrolls could be on the cards.
Nymex reformulated gasoline blendstock for January RBF5, -0.99% --the benchmark gasoline contract--fell 75 points to $1.7873 a gallon, while January diesel traded at $2.1086, 91 points lower.
ICE gasoil for December changed hands at $620.75 a metric ton, down $1.25 from Thursday’s settlement.
