Oil slides after Saudi cuts to US prices 

Oil prices fell sharply on Tuesday after Saudi Arabia on Monday lowered the price it charges customers in the US in an effort to prop up its share of the American market.

West Texas Intermediate fell as much as 2 per cent in early trade on Tuesday to a three-year low of $77.20 a barrel, while the benchmark Brent crude fell as much as 2 per cent to $83.12.

Although Saudi Arabia increased the price it charges customers in Asia and Europe for its crude oil for the first time in five months, the selling price to the US was cut from the prior month.

In the US, the price of Saudi imports was set at a premium of $1.60 a barrel to the Argus Sour Crude Index for December, down 45 cents from November, according to Reuters.

Concerns about a global supply glut amid weaker demand drove the benchmark oil price to its lowest level in almost four years last month. Since reaching $115 a barrel in mid June, Brent, the international oil marker, has fallen 25 per cent, while West Texas Intermediate, the US equivalent, is down by a similar amount.

The trading arm of China National Petroleum Corporation has been on a huge buying spree over the past few weeks, snapping up millions of barrels of Middle East crude as global oil prices fell to the lowest level in almost four years.

Price reporting data showed ChinaOil has bought more than 20m barrels of Dubai, Oman and Upper Zakum grades in October, many of them from Unipec, the subsidiary of Chinese state oil company Sinopec.

Oil market experts have suggested that China, the world’s largest energy consumer, is taking advantage of the steep drop in crude prices to fill its strategic reserves.

 

Source: FT-Oil slides after Saudi cuts to US prices

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