Oil prices encounter further hammering, on the back of Saudi Arabia slashing its official selling price (OSP) for across all of its crude grades to all destinations. It is essentially the country raising production and offering its crude at deep discounts to start trying to win new customers next month, according to two people familiar with the country’s oil policy.
As we noted in our last article, the OPEC meeting was very much a make or break for oil prices, which proved to be the case. Prices across the board dropped heavily across the board, taking it to a whopping 58% fall for the year. WTI hit its lowest level seen since February 2016, with further moves south still very much being eyed.
Last Friday, Russia refused to back new deeper cuts on oil output, they had been expressing much reluctance for the past couple of weeks. As previously noted, Russia was not pleased with the fact that the United States is taking advantage of the current oil reduction from OPEC and Russia, producing more U.S. shale oil.
The move from Saudia Arabia over the weekend, would again hit the US shale sector, the rapid growth of which over the past decade has made the US the world’s top producer and forced rivals to restrict output in a bid to prop up the price. Saudi Arabia, however, is reportedly taking a swipe at Russia with its actions. Sources note that Saudi Arabia is set to announce that it will sell its crude into north-west Europe, a key market for Russian barrels, at discounts to its reference price of more than $8 a barrel compared to March.
Oil prices at the beginning of the year produced a double-top formation via the weekly chart view. Price action has since smashed through the neckline of the top area, observed around $51.00. The breakthrough allowed for a fresh wave of selling pressure, contributing to the momentum of the latest fall. It is worth noting, the distance between the top and the neckline equates to some $14.
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