By Barani Krishnan
Investing.com – Oil prices fell more than 1% Thursday, clearly breaking from the rally earlier in the week, as Saudi Arabia’s cut in the selling price of its crude and India’s raging Covid situation offset bullish sentiments over the rebounding U.S. economy and its demand for energy.
The Saudi price cut was reported on Wednesday and while it did not immediately impact the market, it filled the void in the latest session where the pandemic in India, the world’s third largest crude buyer, remained the news. Under the cut, the June official selling price for the flagship Arab light crude was dropped by 10 cents from May to $1.70 a barrel, sources said.
India has reported more than 300,000 new cases daily in the last two weeks, and overtook Brazil in April to become the second-worst infected country in the world. Cumulatively, coronavirus infections in India reached around 20.67 million with more than 226,000 deaths, according to health ministry data on Wednesday. Several studies of India’s data, however, found that cases were likely severely underreported.
“It did not help that Saudi Arabia cut the selling price of oil to India because of Covid demand destruction, reminding traders that risk is still out there,” said Phil Flynn, analyst at Chicago’s Price Futures Group brokerage.
New York-traded , the benchmark for U.S. crude, settled down 92 cents, or 1.4%, at $64.71 per barrel. WTI hit an eight-week high of $66.75 on Wednesday, before snapping a four-day rally.
London-traded , the global benchmark for crude, closed down 90 cents, or 1.3%, at $68.09. Brent hit an eight-week high of $69.94 in the previous session.
Oil rallied earlier in the week on optimism over the U.S. recovery from Covid and data showing a record surge in crude exports from the country and sharply lower domestic petroleum inventories.
U.S. crude exports hit a record high of 4.1 million barrels per day, in a breakout above the previous week’s 2.5 million bpd, the Energy Information Administration said in its weekly petroleum supply-demand dataset released Wednesday.
Crude imports, meanwhile, fell 1.2 million bpd to reach 5.5 million bpd last week.
The combination of these led to a near 8 million-barrel drawdown in , the EIA said, compared with analysts’ expectations for a draw of 2.3 million barrels.
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