Brent plunges below $75/bbl on growing demand woes

The front-month ICE Brent contract has moved $2.16/bbl lower on the day, to trade at $74.98/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures gained some upward thrust after the US Energy Information Administration (EIA) reported a 4.63 million bbl-draw in commercial US crude inventories in the week ended 1 December.

Currently, commercial US crude builds stand at 445.03 million bbls, according to EIA.

The oil market also gained some confidence after Russia’s President Vladimir Putin and Saudi Arabia’s crown prince Mohammed bin Salman met on Wednesday to discuss further cooperation on oil production and exports after the OPEC+ group announced its plans to continue voluntary cuts in the first quarter of 2024.

Other OPEC+ nations including Kuwait and Algeria have also reaffirmed their commitment to the recently announced voluntary oil supply cuts for next year, Reuters reported.

Downward pressure:

Growing concerns about China’s economic health have curtailed Brent futures’ gains this week. China’s total oil imports declined 9% year-on-year due to increasing inventory levels and weak demand projections, Reuters reported citing customs data.

Meanwhile, Brent’s price came under more downward pressure after Saudi Aramco cut official selling prices (OSP) for its flagship Arab Light crude by $0.50/bbl for January loadings to Asia, Reuters reported. In Europe, Aramco lowered its OSP for the crude grade by $2/bbl.

Saudi’s decision to cut prices across markets reflect weak demand fundamentals, according to oil market analysts. “The critical factor in this week's sell-off is attributed to Saudi Arabia's announcement of a reduction in official selling prices for its flagship Arab Light crude in January,” said SPI Asset Management’s managing partner Stephen Innes.

By Aparupa Mazumder

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