Oil prices keep sliding in Asia over Saudi discounts

Oil prices keep sliding in Asia as Saudi Arabia cut the price of its crude sales to Asian and American customers.

US benchmark West Texas Intermediate for January delivery decreased by 44 cents to USD 66.37 a barrel in Asia’s Friday afternoon trade, while Brent crude for January dropped 49 cents to USD 69.15 a barrel.

“Saudi Arabia has just cut the price of the oil it sells to Asia and the US and this is going to have a big effect on the market today and early next week,” said Daniel Ang, an investment analyst at Phillip Futures in Singapore.

The world’s biggest crude producer, Saudi Arabia said on Thursday it had decreased the January price of its oil for Asian clients by about two dollars.

The kingdom said the price of its oil for the US had also been reduced by 70 cents.

Citing sources familiar with the situation, the Wall Street Journal reported Wednesday that Riyadh prefers crude prices to stabilize at around USD 60 a barrel.

The Persian Gulf Arab states “don’t have a price target, and if prices drop further below USD 60, it won’t be for a long time,” the American newspaper quoted an unnamed Arab oil official as saying.

Saudi Arabia had also last week refused to support a call by producers for output cuts, a decision that sent prices tumbling to their lowest point in five years.

At its 166th ministerial meeting held in the Austrian capital of Vienna on November 27, OPEC surprised the market by not cutting oil output in the face of sliding prices.

The 12-member oil producing organization decided to maintain the production level of 30 million barrels per day where it has stood for three years.