Oil Rises as Saudi Raises Arab Light Official Selling Price
Oil prices rose in the global commodity market on Thursday as Saudi Aramco raised its official selling price. Saudi Arabia’s state oil company raised official selling prices for all grades and to all regions for March loadings.
This is coming amidst a significant rise in US crude oil inventories, which signals a weak demand outlook for the world’s largest oil consumer.
Brent crude rose by 0.04%, trading at $74.61 per barrel, while the US benchmark West Texas Intermediate (WTI) increased by 0.08%, reaching $71.06 per barrel, compared to its prior session close of $71.
Aramco’s flagship Arab Light into Asia was increased by US$2.40/bbl to US$3.90/bbl over the benchmark—the highest level since December 2023. It is also the largest monthly increase since August 2022.
Saudi Aramco increased the price for its Arab Light oil for March deliveries by $2.40 to $3.90 per barrel, the highest since December, according to ING note. The adjustment to oil pricing is the largest since August 2022.
Market analysts suggest that the move is in response to supply-side pressures and heightened geopolitical concerns, while also supporting Saudi Aramco’s expectation of strong oil demand in the coming months.
Data from the Energy Information Administration (EIA) revealed a buildup in US crude oil inventories, strategic petroleum reserves, and gasoline stockpiles.
US inventories of commercial crude oil increased by 8.7 million barrels during the week ending Jan. 31, substantially higher than the market prediction of 5.02 million barrels rise.
Strategic petroleum reserves, which are excluded from commercial crude stocks, increased by 300,000 barrels and gasoline inventories rose by around 2.2 million barrels during the same period. The larger-than-expected increase in oil inventories exerted downward pressure on prices.
The increase was driven by strong imports, which grew by 467,000 barrels per day week on week with stronger flows from Canada, which increased 347,000 b/d, according to ING note.
In addition, oil output recovered last week, following the impact of winter storms. Crude oil output in the Lower 48 is estimated to have grown by 232,000 b/d. ING said refiners also increased their utilisation rates by 2.4pp over the week, which saw gasoline inventories rising by 2.23 million barrels.
However, distillate stocks fell by 5.47 million barrels over the week. Cold weather boosted distillate demand, with implied demand hitting its highest level since early 2022. #Oil Rises as Saudi Raises Arab Light Official Selling Price Ministry Seeks $2 billion Fibre Optics Funding
