Oil dips; Saudi cuts mania at cross-roads with slowing U.S. road travel
Investing.com — It’s the Saudi playbook: Cut production when demand is bad and punish your best customers (Asians) who are beholden to you.
Despite doubling down on these, OPEC’s front-runner couldn’t put too much octane into the oil rally Monday, with crude prices feeling heavy after a six-week run-up.
New York-traded West Texas Intermediate, or WTI, crude settled down 88 cents, or 1.1%, at $81.94 per barrel. The U.S. crude benchmark gained almost 20% over the past month-and-a-half, reaching $83.23 last week for its highest since April.
London-based Brent crude settled the U.S. trading session down 90 cents, or 1.04%, on Monday at $85.34. Like WTI, Brent also hit three-month highs last week, reaching $86.64, and gaining about 17% over the past six weeks.
Monday’s price slide came after the Saudis announced last week that their daily production cut of one million barrels per day, enforced in July and August, would be extended to September.
Russia chirped in on the Saudi announcement, saying it would shed 300,000 barrels per day from its own exports.
Topping those measures, was a hike on Monday by the Saudis in the selling price of their crude to Asia and some European destinations.
“Also dragging oil prices down is the rising expectations that the U.S. will see a recession by the end of 2024,” Ed Moya, analyst at online trading platform OANDA, added, citing a Bloomberg investor poll that showed two-thirds of 410 respondents expecting a recession by end-2024, and 20% seeing one by end-2023.
To hear it from both ends of the market, one constituency (the bears) sees demand weakening with the approach of the Sept 4th Labor Day, where summer travel will officially wind down, meaning less pump sales of gasoline
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