Singapore (Reuters)-Oil prices fell by more than 1% on Monday after Saudi Arabia hit its lowest since July after the biggest monthly price cuts and pandemic for Asian supplies in five months subsided optimism about demand recovery.
Brent oil () fell 1.3% to $42.11 a barrel, a 55 cents (GMT 0642), then fell to a low of $41.51 since July 30th.
US West Texas heavy oil () fell 64 cents (1.6%) to $39.13 per barrel after falling to $38.55, the lowest since July 10.
The world is brimming with crude oil and fuel despite cuts in supply from the Organization of Petroleum Exporting Countries (OPEC) and allies known as OPEC+ and government efforts to boost the global economy and oil demand. As a result, refineries have cut fuel production, and oil producers such as Saudi Arabia cut prices to offset the decline in demand for crude oil.
Howie Lee, economist at OCBC Bank in Singapore, said, “The sentiment has become bitter and there may be some sales pressure going forward.”
Monday’s Labor Day holiday marks the traditional end of the peak summer demand in the U.S., which has renewed interest in investors’ current sluggish fuel demands from the world’s largest oil users.
China, the world’s largest oil importer that has supported prices with record purchases, slowed intake in August and increased product exports, according to customs data on Monday.
Keisuke Sadamori, Director of Energy Markets and Security at the International Energy Agency, told Reuters: “There is a lot of uncertainty about the Chinese economy and its relations with major developed countries, the United States and nowadays Europe.” Said.
“It’s not an optimistic situation to cast a shadow over the growth prospects.”
Saudi Arabia, the world’s number one oil exporter, cut its official selling price for Arab light crude oil in October since May, indicating that demand remains weak. Asia is the largest market in Saudi Arabia by region.
In August, the OPEC+ group eased production cuts to 7.7 million barrels per day after global oil prices improved from an all-time low due to declining fuel demand from the coronavirus pandemic.
Oil is also under pressure as US companies increase drilling for new supplies since the recent oil price recovery.
Last week, US energy companies added oil and rigs for the second time in the last three weeks. Baker Hughes Co (N:) on Friday.
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