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Oil prices were mixed on Tuesday, with fears of slowing demand spurred by Saudi Arabia’s steep cutbacks in oil contract prices for Asia, but losses were limited by good Chinese economic statistics. After losing 39 cents on Monday, Brent crude futures were up 12 cents, or 0.2 percent, to $72.34 a barrel at 0947 GMT.
Due to the United States’ Labor Day weekend, there was no settlement price for Monday. U.S. West Texas Intermediate oil traded at $68.83 a barrel, down 46 cents, or 0.7 percent, from Friday’s closing. “The deep cut in Saudi OSP and the aftershock of Friday’s disappointing U.S. jobs data that strengthened the dollar yesterday were enough to put bulls on the backfoot,” Tamas Varga of oil brokerage PVM said.
Saudi Aramco (SE:2222) slashed official selling prices (OSPs) for all crude grades sold to Asia by at least $1 per barrel on Sunday. The steep price cuts, an indication that demand in the world’s top-importing region is still sluggish, come as Asia is engulfed in lockdowns to combat the Delta version of the coronavirus, casting a pall over the economy.
At the same time, the US economy added the fewest jobs in seven months in August, as hiring in the leisure and hospitality industry slowed due to a rise of COVID-19 infections, which weighed on restaurant and hotel demand. Strong Chinese economic indications, on the other hand, supported oil prices, as did prolonged supply disruptions in the United States due to Hurricane Ida.
China’s crude oil imports increased by 8% in August compared to the previous month, according to customs data, as refiners restarted purchases following the imposition of new import limitations. Exports surprisingly grew at a quicker rate in August thanks to strong global demand, helping to relieve some of the burden on the world’s second-largest economy as it navigates challenges from multiple directions.
More than 80% of oil production in the Gulf of Mexico remained shut after Hurricane Ida, according to a US regulator, more than a week after the hurricane made landfall and wreaked havoc on the region’s essential infrastructure. After Hurricane Ida affected offshore oil wells and onshore refineries in the Gulf, hedge funds purchased petroleum at the second-fastest pace this year last week.