Crude oil futures were mixed during mid-morning trade in Asia Tuesday as markets digested bullish reports on Saudi crude exports and bearish reports on China demand data. At 10:35 am Singapore time (0235 GMT), ICE April Brent crude futures were down 40 cents/b (0.60%) from Monday’s settle at $66.10/b, while the NYMEX March light sweet crude contract was up 15 cents/b (0.27%) from Friday’s settle at $55.74/b.
The US markets were closed on Monday on account of Presidents’ Day holiday. Saudi Arabia, the world’s largest crude exporter, shipped 7.687 million b/d of crude in December, a 548,000 b/d drop from November, when shipments were the highest since November 2016, according to JODI data published Monday. Saudi Arabia reported to OPEC earlier this month that its January crude production dropped to 10.243 million b/d, as the kingdom slashed output ahead of a new production cut agreement that went into force January 1.
Saudi energy minister Khalid al-Falih told the Financial Times last week his country’s output would fall to 9.8 million b/d in March, below its quota under the latest deal of 10.311 million b/d. Exports will be cut to near 6.9 million b/d, he added. “Sharp cuts on crude oil production and export levels by Riyadh (world’s largest crude oil exporter) in December from a 2-month high have highlighted its determination to rebalance oil market fundamentals, ” Benjamin Lu, investment analyst at Phillip Futures said. “Energy prices continued to inch higher amid tightening supplies, ” ANZ analysts said in a note.
“Saudi Arabia pledged to cut its production more than agreed in the last OPEC meeting, while production is falling in other OPEC countries, particularly Libya, Venezuela and Iran, ” they added. Meanwhile, China’s apparent oil demand growth is projected to slow to 3.2% in 2019 from 5.3% in 2018, continuing to decelerate from 5.9% growth in 2017, amid a weakening economy and uncertainties arising from the US-China trade war, according to S&P Global Platts Analytics. “We view the current price rise as exaggerated and see growing correction potential, ” Commerzbank analysts said in a note. “The fact that oil production in the US is currently rising significantly more sharply than previously expected is being completely ignored at present,” they added.