Oil prices fell on Monday after Saudi Arabia’s deep monthly price cuts for Asian sales and demand uncertainty in China overshadowed the recovery in the market.
Brent crude LCOc1 was trading at $42.03 a barrel, down 63 cents or 1.5%, by 1555 GMT, after earlier sliding to $41.51, its lowest since July 30.
West Texas Intermediate U.S. crude CLc1 fell 67 cents, or 1.7%, to $39.10 per barrel after hitting $38.55, its lowest since July 10.
The weather changed in the second half of last week and the sudden risk leaned downwards. Saudi Arabia, the world’s largest oil exporter, lowered the October official sales price of Arab Light crude oil, which it has sold to Asia since May. This was interpreted by the markets as a sign that the pace of demand recovery in the region, which is home to the second and third largest oil consumers, is slowing.
The world’s largest oil importer China, which supports oil prices with record purchases, slowed its purchases in August and increased its product exports, according to customs data on Monday. This is not so disappointing by the way. When the finished product decreases, it will increase the import volume again. The important thing is that both trades develop in a balanced way, in volumes that support each other.
Another fact of concern nowadays is that the Chinese economy is not very clear about its relations with key industrialized countries such as the USA and Europe. It is not a situation that contains uncertainties, overshadows the growth outlook and unfortunately that can be interpreted as optimistic.
Following the recent rebound in oil prices, US companies are increasing their drilling for new supply, another usual and / but negative factor keeping oil under pressure.
However, the positive promises and hopes for potential COVID-19 vaccines will undoubtedly support prices.