Saudi Price Cut Puts Pressure on Oil Market
January 9, 2024
Energy prices were down big in yesterday’s trading session as Saudi Arabia cut its selling price on crude to Asian. It was also reported that OPEC+’s output rose in December 2023 by 70,000 bpd from November 2023. This also put pressure on prices and called into question whether OPEC+ can deliver on their production cuts.
The other bearish story was the report from Reuters that the funds that track the Bloomberg Commodity Index and the S&P GSCI are likely to sell about $2 billion worth of WTI crude oil in the coming days as their annual rebalancing of their portfolios takes place. After yesterday’s prices selling off the market the still has the question of was most of this selling done yesterday or is there more to come. Even despite the large dollar amount the market was able to test technical support at $70 dollars per barrel but was not able to break it. After yesterday’s selling the market is getting a rebound today as I am sure some traders saw the value of WTI crude oil near $70.
Israel military stated that they expect the war against Hamas to continue through 2024, which raised the chances of the conflict growing into a regional crisis that could disrupt Middle Eastern oil production.
Early estimates I have seen for the DOE inventory report this week is crude down 1.2 million barrels and builds of about 4 million barrels each for gasoline and distillate.