Oil tumbles lower on reports of new Saudi price cuts

Oil tumbles lower on reports of new Saudi price cuts

NEW YORK: Oil prices fell in London and New York on Thursday (Dec 4) helped by reports that Saudi Arabia has trimmed its export prices and is doing nothing to tighten supplies.

US benchmark West Texas Intermediate for delivery in January lost 57 cents from Wednesday’s close to US$66.81 per barrel. In London deals, Brent North Sea crude for January lost 28 cents to US$69.64. Prices for both remained around US$2 a barrel above their Monday lows, but there was no sign of support in the markets.

Reports said Riyadh cut January prices for its crude to Asian and US buyers, as the world’s leading exporter defends its market share and, some analysts speculate, seeks to drive high-price producers out of the market.

“A source familiar with official Saudi policy says they have no particular price level in mind and will allow the market to arrive at an appropriate price level,” said Tim Evans of Citi Futures. That contrasts, Evans noted, with the Saudi stance as recently as May that it saw US$100 a barrel for Brent as ideal for both exporters and consumers.

Also contributing to continued weakness in prices was the European Central Bank’s decision to hold off on new action to spur growth in the eurozone.

But ECB chief Mario Draghi stressed the bank has stepped up preparations for additional measures to fight deflation in the eurozone, keeping the door open for a full quantitative easing programme early next year if economic indicators do not improve.

Leave a Reply

Your email address will not be published.