Oil price recovers slightly following selloff on Saudi comments

iNVEZZ.com, Tuesday, December 23: Prices of crude oil futures have risen slightly so far in today’s trading following yesterday’s sharp decline, which saw futures give back most of Friday’s gains. Crude fell under pressure during the previous session following comments from Saudi Energy Minister Ali al-Naimi.

Brent for February delivery had gained 0.17 percent, or 10 cents, to $60.21 as of 07:19 GMT on the London-based ICE Futures Europe exchange. Yesterday, the contract shed over two dollars after Al-Naimi told the Saudi-owned Al-Hayat newspaper that the world’s top crude exporter would maintain its production, “unless a new client comes along and then we may increase it”. According to Al-Naimi, OPEC doesn’t intend to reduce supply “whatever the price is”.

Bloomberg cited Michael McCarthy, chief market strategist at CMC Markets in Sydney, as saying: “Comments that the Saudis would put up with $20 oil if necessary is certainly not constructive for prices […] Downward momentum has stalled for now but we’re not seeing any particular support for the oil price.”
February WTI futures, had gained 0.74 percent, or 41 cents, to $55.67 in electronic trading on the NYMEX in New York as of 07:19 GMT. US crude slid 3.47 percent yesterday, erasing most of Friday’s 4.33 percent rally. According to analysts, expectations for firm US economic data later in the day had pushed the contract higher.

Reuters quoted a note from Phillip Futures analysts as saying: “The focus of today would likely come from US durable orders and US GDP figures. Durable goods orders depict a strong manufacturing sector which implies a higher industrial use of crude oil […] With the US economy picking up, we expect the figures to be favorable.”
Market participants will also be eyeing tomorrow’s weekly inventory report from the US Energy Information Administration (EIA), scheduled for release at 15:30 GMT. A Bloomberg News poll has it that crude inventories shrank by 2.5 million barrels in the seven days ended 19 December.
Based on the two front month contracts, Brent was trading at a premium of $4.54 to WTI as of 07:19 GMT, down 31 cents from yesterday’s $4.85 close. Last Tuesday the premium ended at $4.08.