HIGHLIGHTS
Saudi Arabi cuts Asia-bound OSPs
Chinese August crude imports up 8%
US Gulf crude output still 79% offline
Crude oil futures settled lower Sept. 7 as a stronger US dollar and a sharp decline in Saudi Arabia’s crude prices for Asian buyers overshadowed bullish Chinese import data and extended US Gulf of Mexico production issues.
NYMEX October WTI settled down 94 cents at $68.35/b, and ICE November Brent gave up 53 cents to settle at $71.66/b.
The ICE US Dollar Index climbed to 92.544 in afternoon trading, rallying off a one-month low close of 92.035 the session prior.
“Crude prices slumped alongside a broad commodity selloff that stemmed from a surging dollar,” OANDA senior market analyst Ed Moya said in a note, adding: “With the oil market still stuck in deficit, WTI crude might see limited downside even if the dollar rally gains traction.”
NYMEX October RBOB settled down 2.40 cents at $2.1300/gal, and October ULSD finished 3.78 cents lower at $2.1216/gal.
The strength of the dollar and dollar-denominated commodities, including oil, are typically inversely correlated.
Oil prices came under pressure overnight on the heels of Saudi Aramco’s cut in official selling prices for October-loading crude for Asian customers sharply exceeding market expectations.
For Asia-bound crude, October differentials versus an Oman/Dubai basis for Super Light and Light grades were cut by $1.30/b, Extra Light by $1.20/b and Medium and Heavy grades by $1/b versus September levels, Aramco said Sept. 5.
The price cuts come as several Asian refiners asked for less oil from Saudi Arabia in August, as renewed outbreaks of the COVID-19 delta variant sapped demand amid increasing OPEC+ supply, according to ANZ research analysts.
“Supply side issues failed to help crude oil, with investors instead concerned about Saudi Arabia’s move to cut prices to Asian buyers,” ANZ research analysts said in a Sept. 7 note. “The OPEC producer lowered its prices on all of its grades of crude oil to entice more Asian buyers. This follows three months of increases and raises the question of whether it’s looking to boost market share or is wary of weaker demand.”
Chinese crude imports in August rose 8% month on month to 10.53 million b/d, or 44.53 million mt, General Administration of Customs data showed Sept. 7. It was the first time since April that inflows crossed the 10 million b/d mark, signaling a slowdown of destocking activity in China’s state-owned oil sector.
More than a week after Hurricane Ida made landfall, 1.44 million b/d, or 79.33% of total Gulf of Mexico crude output, remained shut in, the Bureau of Safety and Environmental Enforcement reported Sept. 7.
US Gulf upstream operators had restored 20 more production platforms by noon Sept. 7 than were active 24 hours earlier, BSEE reported. Total platforms still evacuated totaled 79, or 14% of all platforms in the US Gulf, compared to 99 the previous day.
