Brent crude oil futures drop 39 cents

Oil prices fell Monday after Saudi Arabia slashed crude oil contract prices for Asia, rekindling concerns about the demand outlook. The Brent crude oil futures fell 39 cents to close at $ 72.22 a barrel. The US crude oil West Texas Intermediate last traded 40 cents lower at $ 68.89 a barrel. The state-owned oil company Saudi Aramco (SE: 2222) said in a statement to its customers on Sunday that it had increased the official sales prices (OSP) for October for all types of crude oil sold to Asia, its largest customer region, by at least $ 1 each Barrel will lower. The price cuts were stronger than expected, according to a Reuters survey of Asian refineries. "If the Saudi giant cuts its sales prices to Asia for October, signaling that the relationship between supply and demand is shifting slightly, traders today cannot help but follow this path," said Bjornar Tonhaugen, Head of Oil Markets at Rystad Energy. Global oil supply is increasing as the Organization of Petroleum Exporting Countries and its allies, a grouping known as OPEC +, increase their production by 400,000 barrels per day (bpd) monthly between August and December. "Given that OPEC + continues its plan to increase production every month, despite weak data from China and the US raising fears of economic slowdown and Saudi Arabia seeking market share in the region, oil prices are likely to remain under pressure," he said Jeffrey Halley, senior market analyst for the Asia-Pacific region at brokerage firm OANDA. The earlier decline in crude oil futures compounded Friday's losses after a weaker-than-expected US labor market report pointed to a patchy economic recovery that could mean lower fuel demand if the pandemic rebounds. The losses were limited by fears that supply in the US would remain limited after Hurricane Ida. The US government is releasing crude oil from strategic oil reserves as production on the US Gulf Coast is only recovering with difficulty. As the Bureau of Safety and Environmental Enforcement announced on Monday, oil production in the Gulf of Mexico continues to be restricted by around 1.5 million barrels a day after Hurricane Ida. Another 1.8 billion cubic feet per day of natural gas production has also been shut down. The hurricane also prompted US energy companies to reduce the number of operating oil and gas rigs for the first time in five weeks, data from Baker Hughes showed on Friday. The number of drilling rigs has dropped more sharply in the past week than it has been since June 2020.