Oil demand is robust-it's oil speculators that are behind the most recent drop in global crude oil prices, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman has said.
Of demand, bin Salman said definitively, "It's not weak. People are pretending it's weak. It's all a ploy."
The Saudi Energy Minister has lashed out repeatedly at traders and oil speculators, warning them earlier this year that anyone betting against crude oil would be "ouching like hell". It is just one of many warnings.
The recent price drop has been blamed by some on weak crude oil demand. But according to bin Salman, some in the oil market have been misreading the cues with increased oil exports from OPEC member countries in recent months, and how it relates to their production.
Shipments, says bin Salman, are seasonal, and tend to dip in the summer before rising again in September and October. But this is not to be misconstrued as fluctuating output, he warned, adding that this was "an abuse of numbers."
In a sign of strong demand, China's independent refinery hub, the Shandong province, asked Beijing for another 3 million metric tons of fuel oil import quotas for the remainder of the year as refiners struggle to raise output. If approved, the request could raise the oil import quota for this year to 19.2 million tons.
Oil prices were trading up by 1.17% mid-morning on Thursday, but are down by more than $6 per barrel week over week. Both WTI and Brent have fallen significantly this month, with Brent now trading at $80.66 and WTI trading at $76.45.
On Wednesday, Saudi Arabia said it would extend its voluntary production cuts of 1 million barrels per day of crude oil until the end of the year. The market interpreted that declaration as an indictment on crude oil demand. This mingled with Saudi Arabia's move to keep the official selling price of crude oil to its prized market, Asia, the same, casting even more doubt on Saudi Arabia's true vision of future oil demand.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
Comments
The Saudi Energy Minister Prince Abdulaziz bin Salman believes that speculators are behind the most recent drop in global crude oil prices and I agree with him but speculators on their own aren’t that powerful to cause such a plunge in prices.
I, therefore, hazard another explanation namely that speculators, oil traders and the global oil market are all in a state of anticipation awaiting the storm after the calm.
Immediately after the Hamas attack on Israel, oil prices added a price premium taking Brent crude to almost $97 a barrel. But when it became apparent that Iran was neither involved in the attack nor it has any intention of getting involved along with its allies in the conflict, the war premium collapsed and with it oil prices.
The market is now in a state of calm before the storm. The deployment of two US aircraft carrier groups with thousands of troops on board and with destroyers and submarines and Israeli leaders calling for cutting the head of the snake in reference to Iran give rise to the possibility that they are looking for an excuse or could invent one to attack Iran and destroy its nuclear plants. In so doing they believe that they could solve the nuclear issue with Iran once for all or at least delay Iran’s acquiring nuclear weapons by a few more years.
This is what I call the storm that will follow the current calm in the market with Brent crude probably hitting $150 a barrel as a result of a disruption of the oil flow through the Strait of Hormuz.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert
Interesting that the govt shut down EIA last week and didn't report gasoline demand data
The truth Demand for gasoline in US for week of 11/3/2023 was huge 9,492,000 bbls per day vs 9,011,000 bbls per day same week 1 year ago. This week ( week ending 11/11/23) demand for gasoline was 8,949,000 bbls per day vs 8,742,000 bbls per day 1 year ago