Oil prices slump after report Saudi Arabia to scrap price target, boost output

By William Watts

Oil futures fell Thursday morning, feeling pressure after the Financial Times reported that Saudi Arabia was ready to abandon its $100-a-barrel price target as it prepares to increase production in a bid to take back market share.

Price moves

West Texas Intermediate crude CL00 for November delivery CL.1 CLX24 fell $1.02, or 1.5%, to $68.67 a barrel on the New York Mercantile Exchange.November Brent crude BRNX24, the global benchmark, dropped $1.13, or 1.5%, to $72.33 a barrel on ICE Futures Europe. The more actively traded December Brent contract BRN00 BRNZ24 was down $1.04, or 1.4%, at $71.86 a barrel.

Market drivers

Saudi Arabia and seven other members of OPEC+ - made up of the Organization of the Petroleum Exporting Countries and Russia - previously agreed to push back the unwind of some production cuts from October to December, sparking speculation the output boost could be indefinitely postponed. The FT report, citing unidentified persons described as familiar with the country's thinking, said Saudi Arabia is committed to resuming that production on Dec. 1 even if it leads to a period of lower prices.

Pressure was also tied to reports eastern and western factions in Libya have patched up disagreements over leadership of the nation's central bank that had led to a sharp fall in crude output, noted Ricardo Evangelista, senior analyst at ActivTrades.

Crude prices rose sharply on Tuesday after China, the world's largest crude importer, unveiled an aggressive stimulus program. Doubts over the ability of the measures to deliver a lasting boost to the economy of the world's largest crude importer contributed to a retreat Wednesday, analysts said.

"With rising supply and uncertain demand, oil prices may face further downward pressure in the near term," Evangelista said.

-William Watts

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09-26-24 0644ET

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