The crude oil trend that started on Friday continues this morning. Weak US employment data – Nonfarm Payrolls in particular – put pressure on quotes at the end of the week. The published report pointed to a patchy economic recovery, which could mean a slowdown in fuel demand due to the onset of a new pandemic wave.
It should be noted that before the data release, oil updated monthly highs above $73.50 per barrel, and the subsequent decline was moderate. In general, by the end of the week, Brent added more than 1%.
However, on Monday morning, the price lost exactly this 1%, levelling off the gains and remaining under pressure. This time, the reason is no longer in the American labor market statistics. Over the weekend, the largest exporter, commodity giant Saudi Aramco (Saudi Arabia), said that in October, it would reduce the official selling prices for all grades of oil that enter Asia by at least $1. Such a move signals concerns about the volume of demand and that there are enough reserves in the world markets.
A Reuters poll among Asian refiners showed that the price drop of $1 per barrel significantly exceeded their expectations.
As a result, this morning, November Brent futures fell 90 cents, or 1.2%, to $71.71. October WTI futures fell 84 cents, or 1.2%, to $68.45.
Meanwhile, the US government is releasing oil from strategic reserves as production on the Gulf Coast is still pending due to Hurricane Ida. Access to 1.7 million barrels of oil and 1.99 billion cubic feet of natural gas is now blocked, according to a government report released on Friday. So far, the lack of electricity does not allow some stations to resume their work.
The hurricane also forced the US energy companies to cut their oil and gas rigs last week, and the number of oil rigs fell to lows since June 2020.