By Stella Goh

Oil sinks below $40 per barrel with its demand drop off looming after the Saudi Arabia cut pricing for October crude sales as the summer driving season winds down with many countries due to the control of Covid-19 pandemic.

After the Saudi Armco reduced its key Arab Light grade by a large-than-expected amount for shipments to Asia, the futures in New York was gloomy as it slipped 1.5% in Asian trading. The kingdom also lowered its prices to the US for the first time in six months.

The U.S. West Texas Intermediate Crude skidded 7.5% last week due to nervousness over the demand and a rout in stocks, the biggest loss since June. The infection rates in the US have slowing down but the pandemic appears as staging in parts of Europe and cases in India are still surging.

Due to a still-tepid demand backdrop and a continued increase in output from the OPEC+ alliance after the crude is off to a poor start in September. According to an economist at Oversea Chinese Banking Corp in Singapore, Howie Lee, price correction is overdue and weakening margins for major fuels such as diesel may potentially become a concern. He also stated that any rally in prices will face headwinds as long as crude oil inventories remain materially high.

Prices

• WTI for October delivery fell 1.5% to US$39.19 per barrel on New York Mercantile Exchange as at 7.48am in London after dropping 3.9% last Friday.
• Brent Crude for November settlement skidded 1.2% to US$42.15 per barrel on the ICE Futures Europe Exchange after declining 3.2% last Friday.
   

Brent’s three-month time spread was US$1.48 per barrel in contango. The prompt prices are cheaper than later-dated contracts compared with US$1.09 in the contango a week earlier. The changes in the market structure of the global crude benchmark indicates the concern about oversupply is increasing.

According to the Russian Deputy Energy Minister Pavel Sorokin, the global oil demand may not get back to pre-virus levels for another two to three years. However, Energy Minister Alexander Novak said the oil prices are likely to recover to average US$50 to US$55 a barrel in 2021 as the development of Covid-19 vaccines spurs an economic recovery.

Join us now in stockpick2u and we will share our views on the company and details of shareholders’ meeting.

-------------------------------------------------------------

Stockpick2u
https://www.stockpick2u.com/plans-pricing
 

Please contact us：
012-6644 828

WhatsApp link:
https://bit.ly/33pEKcS

Website: www.stockpick2u.com

Facebook: https://www.facebook.com/stockpick2u/?ref=bookmarks

Services: General Meeting Information, Company Fundamentals Sharing

Disclaimer:

The above data are purely based on personal views. The content above does not contain any trading advice, and only can be used as learning and information purposes. Please analyze by yourself, understand the risks, and discuss the nature of investment with professional financial advisors.

Stockpick2u is not responsible for any accuracy, completeness, correctness, validity of any shared content and opinion. All misunderstandings, errors, omissions, delays in information are not responsible for any loss incurred.