Oil prices steady after wiping out new year gains on Saudi price cuts

investing.com:

Investing.com-- Oil prices steadied in Asian trade on Tuesday after falling sharply at the beginning of the week, as sharp price cuts on oil sales by Saudi Arabia ramped up concerns over sluggish demand.

The world’s largest oil exporter slashed the prices of its exports to Asia and parts of Europe, with prices of Asian exports falling to their lowest in 27 months.

The move came amid growing concerns over slowing crude demand, particularly in major Asian consumers such as China. It also came as Saudi Arabia grapples with increasing competition for crude buyers, as other Middle Eastern and African countries increased production in December.

The trend presented more headwinds for oil prices- with demand appearing weak, while markets are likely to remain well-supplied for at least the first half of 2024.

Brent oil futures expiring in March rose 0.2% to $76.30 a barrel, while West Texas Intermediate crude futures rose 0.1% to $70.98 a barrel by 20:02 ET (01:02 GMT). Both contracts plummeted over 3% each on Monday, wiping out all gains made in the first week of 2024.

In addition to the Saudi price cuts, Reuters data also showed that oil output from the Organization of Petroleum Exporting Countries and allies (OPEC+) unexpectedly increased in December.

The rise came as production cuts by Saudi Arabia and Russia were largely offset by increased production from other members of the producer group.

Disagreements over more production cuts saw OPEC+ member Angola leave the cartel in December, presenting doubts over just how much headroom the group had to keep supporting oil prices.

OPEC+ production cuts for 2024 had largely underwhelmed markets, given that they were voluntary and of a smaller margin than oil bulls were hoping for.