Crude falls over $1/bbl on Saudi supply boost

17 June 2008 10:52  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude prices fell by more than $1/bbl on Tuesday, amid a strengthening in the US dollar and easing supply concerns following Saudi Arabia’s plan to raise production to its highest level since 1981.

 

At 09:37 GMT, July NYMEX light sweet crude futures traded at $133.32/bbl, down $1.29/bbl on Monday’s settlement level. Earlier the contract fell to a low of $133.11/bbl, down $1.50/bbl.

 

At the same time, August Brent on London’s ICE Futures were traded at $133.09/bbl, down $1.62/bbl on the previous settlement price. Earlier the contract fell to a low of $133.02/bbl, down $1.69/bbl.

 

Prices had hit record highs during intraday trade on Monday as fresh weakness in the US dollar brought back speculative money into commodities. However, prices then fell sharply by the close as news of the Saudi supply increase impacted the market.

 

Over the weekend, the UN Secretary-General Ban Ki-moon said that following a meeting with the Saudi Arabian Oil Minister Ali al-Naimi, the world’s largest exporter had agreed to increase production in July to 9.7m bbl/day, the highest output rate since August 1981.

 

The longer term impact of Saudi output increases were reported to be hard to judge as much of the production would be in heavier fuel oil rich grades rather than the lighter distillate rich grades that refiners and the market preferred.

By: James Dennis
+65 6780 4359

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