Oil Rises Slightly Amidst Saudi Differential Pricing
Oil prices are little changed on Tuesday despite pledged cuts from members of the Organisation of Petroleum Exporting Countries and allies (OPEC+)
The market registered a minor increase amidst supply uncertainties. ICE Brent rose by 0.24% to $78.22 per barrel from the closing price of $78.03 a barrel in the previous trading session on Monday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $73.23 per barrel, up 0.26% from Monday’s close of $73.04 per barrel.
The oil market ended yesterday on a softer note with ICE Brent settling at around US$78 a barrel as scepticism around OPEC+ cuts continued to weigh on sentiment.
In response, the Saudi Energy Minister stated that the OPEC+ cuts would be delivered in full as announced over the first quarter of 2024. Moreover, the group could extend the cuts further into 2024 if required.
The news has had a muted response so far, with the ICE Brent prompt month contract still trading around US$78.2 at the time of writing.
Last week, OPEC+ agreed on voluntary oil production cuts of about 2.2 million barrels per day (mbpd) for early next year, with Saudi dominating the output reduction share.
In a note, ING commodities strategists said Saudi Arabia could release its official selling price for January deliveries this week.
The market estimates Saudi to cut the selling price for Asian buyers due to softer oil prices and higher inventories; however, a large price cut could give the impression of abundant supplies, according to ING commodities strategists.
Last month, Saudi Arabia lowered prices for European consumers by around US$2.3, leaving the premium relatively unchanged for Asian buyers.
Europe has been witnessing a relatively cold start to the winter; however natural gas prices remain steady at around EUR40/MWh given ample inventory and stronger LNG flows.
European gas inventory was reported at 94% full compared to the five-year average of around 84% at this time of the season reflecting a comfortable supply.
Moreover, LNG supply from the US remains healthy as demand in Asia remains soft and congestion at the Panama Canal makes transporting gas to Europe convenient. Nigeria Eurobond Slumps after CBN Resumes OMO Auction
