Wednesday Sep 9 2020 11:01
2 min
Crude and Brent oil tanked yesterday, hitting the lowest levels since mid-June as markets continued to react to news Saudi Arabia is slashing its export prices for customers in Asia and the US.
Crude oil fell -7% yesterday to close at $36.88, while Brent closed -5% lower at $40.03. Both are moving higher today, with WTI up $0.60 and Brent up $0.53, but September losses are still in excess of -11%.
Saudi Aramco will cut prices for Asian buyers for a second consecutive month, and will cut prices for US refiners for the first time in six months. Chinese refiners have been snapping up cheap oil, importing record amounts recently, but it seems that stockpiles are now filling up.
It’s another worrying sign for the demand outlook, just a month after Aramco’s chief executive claimed Asia’s oil demand was almost back to pre-crisis levels.
At first it had been hoped that the global economy would pick up sharply once lockdowns were lifted, but the increasing numbers of coronavirus infections and some soft eco-data has put these assumptions into doubt.
Indeed, Bank of America Securities predicted yesterday that global oil demand won’t return to pre-pandemic levels for another three years. BofAS analysts point to the collapse in air travel, which they claim won’t be able to recover fully until a vaccine is developed – something they believe is still 12-18 months away.
This week’s US crude oil inventories data is delayed by a day due to Monday’s Labor Day holiday. Figures from the American Petroleum Institute will be published at 20.30 UTC today, with the official Energy Information Administration data due at 15.00 UTC tomorrow (September 10th). EIA natural gas storage figures are released at 14.30 UTC as per usual.
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