MOSCOW (MRC) -- Crude oil futures were seen mixed in midmorning trade in Asia Sept. 7 as weaker economic data put demand concerns back in focus and on spillover effects of Saudi Aramco's price cuts for Asian buyers, reported S&P Global.
At 10:55 am Singapore time (0255 GMT), ICE November Brent futures were 27 cents/b (0.37%) higher at USD72.49/b while the NYMEX October WTI contract was down 19 cents/b (0.27%) at USD69.10/b.
The Labor Day holiday Sept. 6 meant most US markets were closed.
"Oil prices have largely been trading in consolidation as investors digest a series of push and pull factors. On one end, the lackluster US jobs report last week and the price cuts from Saudi Arabia seems to bring some questions for oil demand outlook, while on the other end, supplies are capped by the ongoing impact from Hurricane Ida, which underpins oil prices near-term," IG Market Strategist Yeap Jun Rong told S&P Global Sept. 7.
Several analysts have said oil prices would be impacted by Saudi Arabia cutting prices for Asian buyers. The cuts suggest an uncertain demand outlook as COVID-19 cases are still on the rise in many countries, analysts from Phillip Futures said in a note.
Participants were reacting to physical crude market trends, as Aramco in its much-awaited monthly official selling price release Sept. 5 slashed prices for Asia.
For Asia-bound crude, Aramco cut October differentials versus an Oman/Dubai basis for Super Light and Light grades by USD1.30/b, Extra Light by USD1.20/b, and Medium and Heavy grades by USD1/b from September levels. The cuts were much deeper than the month-on-month drop of 13 cents/b in the Dubai futures cash/paper spread in August, which is said to be a key element in OSP calculations.
Elsewhere in China, the Caixin/Markit services Purchasing Managers' Index fell to 46.7 in August from 54.9 in July, its sharpest contraction in 16 months, while Eurozone retail sales in July also dipped 2.3% month on month.
Despite the slow demand growth in China, analysts said expectations of increased domestic air travel were picking up and a growing number of COVID-19 vaccinations could support the oil market.
Meanwhile, the damage on oil production facilities in the US Gulf of Mexico following Hurricane Ida continued to keep output largely halted, limiting price declines.
On Sept. 5, the US Bureau of Safety and Environmental Enforcement said 88.3%, or about 1.61 million b/d, of US Gulf crude output remained offline.
As informed earlier, Shell said it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said it is not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.