Tags: Oil | Price | Saudi | Arabia

Oil Prices Extend Slide After Saudi Arabia Cuts Prices

Wednesday, 01 Oct 2014 08:29 PM

Brent crude dropped to the lowest price in more than two years after Saudi Arabia cut its November official selling prices to all areas. West Texas Intermediate crude, the U.S. benchmark, slipped to a 17-month low.

Both grades retreated after the Saudi Arabian Oil Co. trimmed its benchmark Arab Light prices to customers in Asia, Europe and the U.S. WTI rose as much as 2 percent earlier Wednesday as the U.S. Energy Information Administration said the country’s crude supplies slipped 1.36 million barrels to 356.6 million.

“The Saudi price cut is a sign that they won’t be cutting back production further and may be setting up for a market share battle,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “One bullish inventory report isn’t going to be enough to support the market when the Saudis are taking these actions.”

Brent for November settlement fell 51 cents, or 0.5 percent, to end the session at $94.16 a barrel on the London-based ICE Futures Europe exchange. It closed at the lowest level since June 28, 2012. The volume of all futures traded was 19 percent above the 100-day average at 3:24 p.m. in New York. Prices decreased 16 percent last quarter and have slipped 15 percent this year.

WTI Slides

WTI for November delivery declined 43 cents, or 0.5 percent, to close at $90.73 a barrel on the New York Mercantile Exchange. It was the lowest settlement since April 23, 2013. Volumes were 53 percent higher than the 100-day average. Prices lost 13 percent in the third quarter and are down 7.8 percent this year.

Aramco cut its November Arab Light prices by between 20 cents and $1.20 a barrel, according to a price list obtained by Bloomberg News.

U.S. equities dropped as the Federal Reserve remains on pace to end bond-buying this month amid growing signs of economic weakness in Europe. Euro-area factories reduced prices by the most in more than a year and German manufacturing shrank, underlining the mounting challenge facing policy makers before the European Central Bank meets tomorrow.

“The worries about the economy are being reflected in the equity market and that’s being felt in oil,” Kilduff said.

U.S. crude stockpiles have dropped in 12 of the past 14 weeks, figures from the EIA, the Energy Department’s statistical arm, show. Inventories were forecast to rise by 1.5 million barrels, according to the median of eight analyst responses in a Bloomberg survey.

Below $90

“Thank God we didn’t see the inventory increase that was expected, because that would have led us below $90,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone.

Refineries operated at 89.8 percent of their capacity last week, down 3.6 percentage points from Sept. 19, at the lowest level since June, according to the EIA report. U.S. refiners schedule maintenance for September and October as they transition to winter from summer fuels.

“The refinery turnaround season is here,” Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone. “You expect to see strength in the products at this time of year and some weakness in the crude as demand slips. Gasoline is the strongest product now.”

Gasoline Supplies

Gasoline supplies decreased 1.84 million barrels to 208.5 million, the lowest level since November 2012, EIA data show. Stockpiles of distillate fuel, a category that includes diesel and heating oil, slipped 2.89 million barrels to 125.7 million.

November gasoline futures increased 1.24 cents, or 0.5 percent, to settle at $2.4497 a gallon on the Nymex. The expiring October contract tumbled 10.94 cents, or 4.1 percent, to $2.5869 Tuesday.

Ultra low sulfur diesel for November delivery rose 0.51 cent to close at $2.6763 a gallon. The expiring October contract settled at $2.6472 Tuesday, the least since June 2012.

Gasoline pump prices were unchanged at $3.333 a gallon nationwide Tuesday, the lowest level since February, according to AAA, the largest U.S. motoring group.

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Brent crude dropped to the lowest price in more than two years after Saudi Arabia cut its November official selling prices to all areas. West Texas Intermediate crude, the U.S. benchmark, slipped to a 17-month low.
Oil, Price, Saudi, Arabia
668
2014-29-01
Wednesday, 01 Oct 2014 08:29 PM
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