Picture: 123RF/PIX NOO
Picture: 123RF/PIX NOO

Tokyo — Oil prices were wobbly on Tuesday as investors grappled with demand concerns after Saudi Arabia’s sharp cuts to crude contract prices for Asia.

Brent crude futures for November rose 4c, or 0.1%, to $72.26 a barrel by 12.56am GMT, after falling 39c on Monday.

US West Texas Intermediate crude for October was at $68.88 a barrel, down 41c, or 0.6%, from Friday’s close, with no settlement price for Monday due to the Labour Day holiday in the US

Demand woes were in the news again after state oil group Saudi Aramco notified customers that it will cut October official selling prices for all crude grades sold to Asia by at least $1 a barrel.

The deep price cuts, a sign that consumption in the world’s top-importing region remains tepid, come as lockdowns across Asia to combat the Delta variant of the coronavirus have clouded the economic outlook.

Markets are also contending with a decision by oil cartel Opec and its allies, a grouping known as Opec+, to raise output by 400,000 barrels a day a month between August and December.

“It’s quiet in Asia trade amid uncertainty over the direction of the market,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. “We expect that oil prices will struggle to move higher as the US summer driving season wanes and as a weaker-than-expected US jobs report underlined slow economic activities,” he said.

The US economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in Covid-19 infections, which weighed on demand at restaurants and hotels.

Oil prices were underpinned, however, by concerns that US supply would remain limited in the wake of Hurricane Ida.

More than 80% of oil production in the Gulf of Mexico remained shut after Ida, a US regulator said on Monday, more than a week after the storm made landfall and hit infrastructure in the region.

Hedge funds purchased petroleum last week at the second-fastest rate this year after Ida disrupted offshore oil wells and onshore refineries in the Gulf of Mexico.

Reuters

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