Saudi Arabia has lowered the sales price of crude oil, which has once again raised concerns about oversupply in the oil market.
On Monday local time, the US energy sector fell 1.2%, the only S&P 500 index sector to close; US oil futures fell more than 4%, the biggest one-day decline since November last year. Earlier, Saudi Arabia lowered the sales price of crude oil, which once again raised concerns about oversupply in the oil market.
Saudi Aramco said it will cut the official price of crude oil for all regions in February, including a premium of up to 2 US dollars/barrel for its flagship Arabian light crude oil compared to the local standard price.
On Monday, WTI crude oil futures for February closed down nearly 4.12%, the biggest closing drop since November 16, at $70.77 per barrel; Brent crude oil futures for March closed down 3.35%, the biggest closing drop since December 12, at $76.12 per barrel.
Among the 15 stocks that fell the most in the S&P 500 index on Monday, 9 were oil and gas stocks. Among them, Schlumberger (SLB.US), Baker Hughes (BKR.US), and Marathon Petroleum (MRO.US) fell nearly 3%, while EOG Energy (EOG.US) and Halliburton (HAL.US) fell more than 2%.
Analysts Ritterbusch said that Saudi Aramco's official price drop was greater than expected, apparently to restore some of the market share lost due to OPEC+ production cuts last year.
Ritterbusch said: “But the sharp drop in the official price of oil also means a reduction in revenue, which will continue to test Saudi leaders' determination to cut OPEC+ production. So far, OPEC+ production cuts have failed to provide significant oil price support.”
Phil Flynn of The Price Futures Group said, “Although the price reduction may be to maintain market share in the face of production cuts, the market sees this move as a clear sign that the economy is slowing down.”
Against the backdrop of heightened tension in the Middle East, WTI and Brent crude oil prices both rose by more than 2% in the first week of 2024, but Flynn said: “The market seems to think that geopolitical risks will not affect supply, and even if they affect supply, demand is weak, so this is irrelevant.”