Home Investing News Oil Drops, Factoring in Saudi Price Cut Amid India Covid Carnage

Oil Drops, Factoring in Saudi Price Cut Amid India Covid Carnage

imageCommodities12 minutes ago (May 06, 2021 03:43PM ET)

(C) Reuters.

By Barani Krishnan

Investing.com – Oil prices fell more than 1% Thursday, clearly breaking from the rally earlier in the week, as Saudi Arabia’s cut in the selling price of its crude and India’s raging COVID situation offset bullish sentiments over the rebounding U.S. economy and its demand for energy.

The Saudi price cut was reported on Wednesday and while it did not immediately impact the market, it filled the void in the latest session where the pandemic in India, the world’s third largest crude buyer, remained the news. Under the cut, the June official selling price for the flagship Arab light crude was dropped by 10 cents from May to $1.70 a barrel, sources said.

India has reported more than 300,000 new cases daily in the last two weeks, and overtook Brazil in April to become the second-worst infected country in the world. Cumulatively, coronavirus infections in India reached around 20.67 million with more than 226,000 deaths, according to health ministry data on Wednesday. Several studies of India’s data, however, found that cases were likely severely underreported.

“It did not help that Saudi Arabia cut the selling price of oil to India because of covid demand destruction, reminding traders that risk is still out there,” said Phil Flynn, analyst at Chicago’s Price Futures Group brokerage.

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down 92 cents, or 1.4%, at $64.71 per barrel. WTI hit an eight-week high of $66.75 on Wednesday, before snapping a four-day rally.

London-traded Brent, the global benchmark for crude, closed down 90 cents, or 1.3%, at $68.09. Brent hit an eight-week high of $69.94 in the previous session.

Oil rallied earlier in the day on optimism over the U.S. recovery from Covid and data showing a record surge in crude exports from the country and sharply lower domestic petroleum inventories.

U.S. crude exports hit a record high of 4.1 million barrels per day, in a breakout above the previous week’s 2.5 million bpd, the Energy Information Administration said in its weekly petroleum supply-demand dataset released Wednesday.

Crude imports, meanwhile, fell 1.2 million bpd to reach 5.5 million bpd last week.

The combination of these led to a near 8 million-barrel drawdown in crude inventories, the EIA said, compared with analysts’ expectations for a draw of 2.3 million barrels.

Oil Drops, Factoring in Saudi Price Cut Amid India COVID Carnage

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related News

Leave a Comment

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!