Crude oil futures moved marginally lower during mid-morning trade in Asia Monday continuing its downtrend seen from Friday’s trading session amid the latest comments from Saudi Arabia while waiting for fresh price cues from US inventory data.
At 10:30 am Singapore time (0230 GMT), ICE March Brent crude futures were down 25 cents/b (0.41%) from Friday’s settle at $60.23/b, while the NYMEX February light sweet crude contract moved 18 cents/b (0.35%) lower at $51.41/b. Uncertainty around the US-China trade war and a weak equities market had pushed crude prices down by more than a $1/b during Friday’s trading session.
“Crude oil prices fell as a risk off tone swept the market after strong gains last week, ” ANZ analysts said in a note. “Asian markets are likely to start mixed today as they await earnings and trade data from China,” analysts from OCBC Bank said in a note.
OPEC has thrown a “lifeline” to US shale producers by cutting output to boost oil prices, Saudi energy minister Khalid al-Falih said Sunday, rejecting the notion of a market share battle. “I can tell you that many [US shale producers] call me when they see that price trend going down and when they see investors starting to turn away, and they say it’s time to do something,” Falih said at an Atlantic Council energy forum in Abu Dhabi.
OPEC and 10 non-OPEC partners led by Russia agreed in December to cut a combined 1.2 million b/d in supplies for the first six months of 2019.
“Market sentiment today is being shaped by undue concerns about demand, underestimation of the impact of agreed supply cuts, and a misreading of the supply-demand trends, which causes counter factual actions by financial players,” Falih said. “I remain convinced that we are on the right track and that the oil market will quickly return to balance.” He added, however, that the coalition stands ready to act further “if we find that more needs to be done.”
“Given this news backdrop, financial investors are also likely to return to the oil market, it was their withdrawal that played a key role in the weak fourth quarter prices, ” Commerzbank analysts said in a note. Meanwhile, Oman is pumping 970.000 b/d, as per their quota in the OPEC agreement for 2019, the country’s oil minister Mohammed al-Rumhy said on Sunday to reporters on the sidelines of an Atlantic Council energy forum in Abu Dhabi.
“We managed to go up to nearly 1 million b/d [in November], then the last agreement in Vienna we committed to cut 2.5% and that pulled us down to 970,000 b/d, and that’s where we are now,” Rumhy said. Market participants would be looking out for last week’s US inventory data to provide further price direction, preliminary data on which is due for release from the American Petroleum Institute later Tuesday and the more definitive numbers from the US Energy Information Administration later Wednesday. As of 0230 GMT, the US Dollar Index was down 0.09% at 95.16. Platts.com
