The price of crude oil continues to move on a negative trend on Tuesday morning. This is due to the weakening demand which is unlikely to change direction in the short term.
Meanwhile, after the Saudi state-owned company Saudi Aramco has announced price cuts in oil supplies in Asia, four major oil refiners in the region have already spoken about increasing supplies at a better price. Nevertheless, analysts assess interest in oil from Saudi Arabia as rather restrained: despite good discounts, not all companies in the Asian region have decided to take advantage of the current situation to purchase raw materials. At present, Asia is considered the largest consumer of black gold in the world.
Saudi Aramco has also initially decided to cut down the price of Arab Light crude, which is mainly supplied to Asia countries. The said roll back in the price will occur for the second time in a row and will amount to $ 1.4 per barrel. Thus, the final price will be $ 0.8 less than for buyers from Oman and Dubai.
There will also be a drop in prices for Arab Super Light and Arab Extra Light, the main consumers of which are also Asian countries. A rollback of $ 1.5 per barrel is expected. And Arab Heavy oil will lose $ 0.9 per barrel.
The situation around the sale of crude oil may indicate mainly that demand remains under great pressure and its recovery in the near future will be strongly limited by external factors. Analysts give absolutely no guarantee that demand will start strengthening in the near future. Moreover, they rather hint at the opposite process, the duration of which is still unclear.
Note that the traditional general decline in demand for gasoline and petroleum products is coming due to the end of the summer auto season in the US and other countries. And if we take into account that under the OPEC agreement, the total volume of oil produced is gradually increasing, it becomes clear that the hydrocarbon market is going through hard times.
Brent crude oil futures for November delivery on the London trading floor dropped 0.14% or $ 0.06 Tuesday morning. Its current level has stopped at around $ 41.95 per barrel. Monday's trading session ended with a fairly substantial decline in price by 1.5% or $ 0.65, which forced oil to move to the lowest levels for more than two months.
The price of futures contracts for WTI crude oil with delivery in October on the electronic trading floor in New York also tanked 1.91% or $ 0.76, which pushed the price back to the level of $ 39.01 per barrel and finally consolidated it below the strategically and psychologically important level of $ 40 per barrel. The day before, there was no trading on this mark due to the observance of Labor Day in the US.
There is little hope that oil prices will start recovering in the near future. Various pressure from the outside is not yet affecting the movement of the trend. Black gold remains to be negatively affected by rather weak statistical data on the economies of European countries. In Germany, industrial production has reflected a decline from 9.3% to 1.2%, which was well below the preliminary expectations of experts.
In addition to this is the still unresolved situation around Brexit. There are growing signs that the UK will not be able to achieve any progress in the negotiation process with the EU and will exit the transition phase without a signed trade agreement. This will force the country to face an unprecedented wave of recession, which may well worsen the situation in the oil market.
