Oil falls more than 2% on rumors Saudis ready to increase production

Brent crude and the U.S. benchmark fell well over 2 percent on Thursday on mainstream media rumors that Saudi Arabia plans to release more oil to the market, with the kingdom willing to back off. $100 per barrel target price.

According to one Financial Times The report earlier in the day, citing unnamed sources, said Saudi Arabia is willing to lower its $100 price target to pump more oil and OPEC+ is set to raise production collectively in December.

At 10:41 a.m. ET Thursday, Brent crude was trading down 2.10% at $71.92, for a loss of $1.54 on the day. US benchmark West Texas Intermediate (WTI) traded down 2.27% at $68.11, for a loss of $1.58 a barrel on the day.

Russian Deputy Prime Minister Alexander Novak said earlier Thursday that OPEC+ was not discussing any proposal for changes to the production cuts of the extended cartel. Initially, OPEC+ was expected to start rolling back some of the 2.2 million barrels per day cut in oil production starting in October this year. This has since been postponed due to the price of oil crash in late August and early September. OPEC+ has delayed the start of the withdrawal of cuts by two months to December 2024.

The cartel’s monthly report for September showed an outlook for subdued demand growth, which put strong downward pressure on oil prices. The monthly report turned bulls into bears, with traders now appearing to view the market as the most bearish since 2011.

Abandoning the $100-a-barrel price target will mean Saudi Arabia will have to accept low oil prices to regain market share.

Saudi Arabia has pumped around 9 million barrels per day (bpd) of crude for over a year without deviating from the target – a move that has cost it market share not only from non-OPEC+ producers, but also from within the cartel itself.

By Charles Kennedy for Oilprice.com

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