Oil falls as economic fears overshadow Saudi output cut
- Date: 06-Jun-2023
- Source: Khaleej Times
- Sector:Oil & Gas
- Country:Saudi Arabia
Oil falls as economic fears overshadow Saudi output cut
Backwardation in Brent crude oil futures steepened after the weekend announcement
By Reuters Published: Tue 6 Jun 2023, 7:57 PM
Oil prices tumbled by more than $1 a barrel on Tuesday, retreating from a strong rally in the previous session as worries over global economic growth outweighed Saudi Arabia’s pledge to deepen output cuts.
Brent crude futures were down $1.30, or 1.69 per cent, at $75.41 a barrel by 1327 GMT. US West Texas Intermediate crude fell $1.39, or 1.93 per cent, to $70.76.
Brent gained as much as $2.60 a barrel on Monday and WTI as much as $3.30 after Saudi Arabia, the world’s top exporter, said at the weekend that its output would drop by 1 million barrels per day (bpd) to 9 million bpd in July.
But weaker demand, stronger non-Opec supply, slower economic growth in China and potential recessions in the US and Europe mean the Saudi cut is unlikely to achieve a “sustainable price increase” into the high $80s and low $90s, Citi analysts said in a note on Tuesday.
Backwardation in Brent crude oil futures — where the current value is higher than in later months — steepened after the weekend announcement, with the six-month spread hitting a five-week high