West Texas Intermediate, the US benchmark, was down 0.8 per cent to $76.60, but remained above its session low of $75.84 reached on Tuesday, which took it to its lowest level since October 2011, while the Brent fell 0.9 per cent to $82.11 on Wednesday, its lowest level since November 2010, Censor.NET reports citing Financial Times.
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Saudi Arabia company Saudi Aramco increased the price it charges customers in Asia and Europe for its crude oil for the first time in five months on Monday (December contracts for Arab light are concluded with discount of $.10 per barrel compared with $1.1 in November), putting to rest rumours that Opec's biggest producer had started a price war against its fellow members. However, the selling price to the US was cut from the prior month: in December, the contracts offer discount of $1.6 per barrel for Argus Sour Crude, compared to $2.05 in November. The competition for the market share has shifted over the Atlantic.
Amrita Sen at Energy Aspects said the Saudis were looking to increase export volumes to the US ahead of "US refineries returning from maintenance and being set to raise runs". Saudi exports in August fell to the lowest since December 2009, as the kingdom pulled back exports in an attempt to improve revenues by reducing pricing pressure on US domestic crudes, she said.
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"The fact that the market has been waiting for the release of the Saudi official selling price the same way that it used to wait for the Department of Energy weekly statistics and the volatility that followed the release of the OSPs confirms that the only solution seen by the market to reduce the oversupplied outlook is an Opec cut led by Saudi Arabia," commented Olivier Jakob of Petromatrix, a consultancy.
Opec is due to meet in Vienna on Nov. 27, and many analysts believe the oil production cartel will not reach an agreement to lower output and prop up prices. Rising supply both in and outside Opec, combined with concerns about weakening demand growth, has seen Brent drop more than 25 per cent from this year's peak of $115 a barrel in June. WTI is down 28 per cent over the same period.
Russian authorities still believe in oil prices recovery. Russia's Ministry of Economic Development posted a forecast last week stating that oil price will be between $90-$110 within the next three years.