Investing.com – Oil bears are back to taunting Saudi Arabia by pressuring the market again, just two days after giving a reprieve to the prolonged sellfoff in crude.
Both West Texas Intermediate and Brent crude futures were just barely higher in Friday’s early afternoon trade after rallying more than 2% in the morning on fears that the oil-rich kingdom and the OPEC cartel it leads will cut some 1.4 million barrels per day (bpd) from global supply.
Prices jumped at first on an analysis by tanker-tracking firm ClipperData that showed the Saudis were already loading fewer barrels on ships bound for the United States this month, continuing a trend that began in September.
By sending fewer barrels to the United States, the Saudis could starve U.S. crude stockpiles, which have swelled by nearly 50 million barrels the past eight weeks. It’s a strategy the kingdom used last year while working alongside OPEC members, Russia and other producers to rescue oil prices from lows under $50 a barrel. ClipperData’s surveys suggest that U.S. imports of Saudi crude oil could soon fall toward the lowest levels on record.
But after the morning highs in New York trade helped by that analysis, prices turned negative before trading just slightly higher with less than two hours to settlement — proving that for any rebound to last, the market might need to be shaken with substantial cuts.
“We need a lot more,” Scott Shelton, broker at ICAP (LON:) in Durham, North Carolina, said in his oil note on Friday, referring to data showing supply reductions.
By 12:45 p.m. ET (17:45 GMT), U.S. was up 13 cents, or 0.2%, at $56.59 per barrel after reaching a high of $57.95 earlier. Despite the rebound of the past two days, WTI remains about 27% lower from four-year highs of nearly $77 hit in early October.
was up 30 cents, or 0.5%, at $66.92 per barrel, after a session high of $68.38. Despite the recovery, Brent remains some 22% lower from its peak of near $87 six weeks ago.
Since Tuesday’s epic 7% loss, oil prices have been volatile, following a Reuters report that Riyadh has widened its initial plan for an initial cut of 1 million bpd to 1.4 million.
The aggressive Saudi stance came amid rising anger in Riyadh at President Donald Trump for giving generous waivers on Iranian oil sanctions after vowing at first to bring Tehran crude exports to zero. It was Trump’s war of words against the Islamic Republic that caused oil prices to spike to four-year highs over a five-month period through October, before the punishing selloff that followed on his waivers.
“The Saudi’s are still simmering after being hoodwinked, bamboozled and snookered and fooled by President Donald Trump,” said Phil Flynn at Chicago’s Price Futures Group . “It appears they feel they have been taken by the art of the deal maker and they want to get oil production cut revenge.”
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Source: Investing.com
