Oil Rallies as Saudi Adjusts Prices in Asia, Europe
The oil market rallied this week strong following the latest decision of Saudi Aramco to trim oil official selling price (OSP) for Asia due to soft demand.
Brent crude traded at $87.33 per barrel on Friday, rising by around 1.06% relative to the closing price of $86.41 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $83.79 a barrel at the same time on Friday, an increase of about 2.75% from last Friday’s session, which closed at $81.54 per barrel.
Meanwhile, the latest data from the Hurricane Centre and Bureau of Ocean Energy Management shows that the threats of oil and gas supply disruptions in the Gulf of Mexico are easing as the storm spares major drilling areas and platforms in US federal waters.
Saudi Aramco slashed prices for all oil grades to Asia for a second straight month as it expects extended weakness in demand from the Asian market.
The Saudi’s flagship Arab Light into Asia decreased by US$0.60 per barrel month-on-month to US$1.80 over the benchmark in August. In comparison, the market expected Aramco to lower the official selling price by around US$0.90 for next month, ING commodities strategists said in a note.
On the other hand, Saudi Aramco raised prices for Northwest Europe and the Mediterranean by US$0.90/bbl for August. Prices of some of the grades in the US were also raised slightly.
Summer driving season in the US, the world’s biggest oil consumer, began with the Independence Day holiday on July 4. The American Automobile Association expects overall travel during the holiday period to be 5.2% higher than in 2023, and car travel is forecast to increase by 4.8% compared to last year.
Tensions have soared along Lebanon’s border with Israel amid cross-border attacks between the Lebanese Hezbollah group and Israeli forces as Tel Aviv presses ahead with its deadly offensive on the Gaza Strip, which has killed more than 38,000 people since last October.
Yemen’s Houthi group continues to target cargo ships owned or operated by Israeli companies or transporting goods to and from Israel in solidarity with the Gaza Strip in the Red Sea, which is crucial for being one of the world’s most frequently used sea routes for oil and fuel shipments.
The fall in US commercial crude oil reserves reflected market perceptions of strengthening domestic demand. Data released by the American Petroleum Institute late Tuesday showed a decrease of 9.16 million barrels in US crude oil inventories.
Official statistics from the Energy Information Administration (EIA) released late Wednesday portrayed a positive demand outlook and limited further price losses. Figures showed that US commercial crude oil stocks decreased by around 12.2 million barrels, while gasoline inventories fell by about 2.2 million barrels. FrazEnergy, Galileo Technologies Sign MoU on 5mcf Gas Development, Delivery
