Oil Steadies as Traders Weigh Saudi Price Cut, Supply Concerns
Oil steadied as traders weighed a pullback in the dollar against price cuts from key producer Saudi Arabia and supply uncertainties.
Brent traded near $64 after sliding 2.1% over the previous two sessions. A gauge of the greenback fell, making commodities priced in the currency more appealing.
The price cut by Saudi Aramco for its main grade to Asia was in line with expectations. Meanwhile, traders continued to assess how supplies may be impacted by the US clampdown on purchases of Russian crude and Ukraine’s strikes on its neighbor’s energy infrastructure.
Refiners in India, the world’s third-largest importer of crude, are busy trying to diversify their supply sources after Western sanctions made buying discounted Russian oil more difficult and risky. Top processor Reliance Industries Ltd. is seeking to sell some cargoes of Middle Eastern oil to domestic and international purchasers, an unusual move for a refiner that’s normally a major buyer.
Brent has slid almost 15% this year as increased output from OPEC+ and non-member nations amplifies concerns about a global glut. The boss of commodities trader Mercuria Energy Group Ltd. said Wednesday that the oversupply is forming slowly, but is likely to be as much as 2 million barrels a day next year. But prices have recovered some ground since the US sanctioned Russia’s two largest oil producers last month.
A recent escalation of tensions between the US and Venezuela also adds to geopolitical uncertainties. President Donald Trump has denied news reports suggesting that Washington is preparing to strike targets in the South American country, an OPEC founding nation that has seen its output dwindle under the strain of US sanctions. But that’s probably not entirely off the table, according to Becca Wasser, defense lead at Bloomberg Economics.
Oil’s slight move higher on Thursday has likely been aided by short-covering and technical buying after prices found resistance below $63.50 a barrel, according to Ole Hansen, head of commodities strategy at Saxo Bank. Some traders may be “sitting on the fence waiting for the price action to send a clearer signal” given the lack of direction in recent days.
Brent for January rose 0.2% to $63.62 a barrel at 9:04 a.m. New York time. West Texas Intermediate for December delivery advanced 0.2% to $59.71 a barrel.
Source : Bloomberg.com
