Oil Edges Lower From Two-Month High, Oil Price WTI Chart by 07/04/2024
Saudi Arabia's Pricing Strategy and Market Response
Oil pulled back from a two-month high as Saudi Arabia cut prices to Asia for a second month, signaling continued demand weakness in the region. West Texas Intermediate slid 0.2% to below $84 a barrel after closing at the highest settlement price since mid-April on Wednesday. Brent crude also edged lower on Thursday. Volumes are likely to be thin on Thursday due to a US holiday. Saudi Aramco will reduce the price of its flagship Arab Light crude by 60 cents a barrel to $1.80 a barrel above the regional benchmark for shipment in August. Traders and refiners expected Aramco to lower the official selling price by 90 cents, according to a survey.
US Crude Inventories and Hurricane Impact
Still, crude’s declines were limited by a drop of more than 12 million barrels in US crude inventories last week, the biggest decline in almost a year. Hurricane Beryl, meanwhile, is disrupting US oil output, with companies including Shell Plc, BP Plc, and Exxon Mobil Corp. evacuating some of their platforms in the Gulf of Mexico. Crude has risen more than 14% from its recent lows in early June on OPEC+ supply constraints, expectations for higher summer demand, geopolitical risks, and bullishness in equity markets. Gains have been pared by concerns about demand in China, the world’s biggest crude importer, which has seen muted buying activity.
Geopolitical and Weather Influences on Oil Prices
“Geopolitics and weather are keeping oil prices well supported in the $80s for now,” Citigroup Inc. analysts including Eric Lee said in a note. “There are reasons to believe that current strength can ease, based on physical market and demand signals, even though hurricanes need to be carefully watched.”
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