Brent Plummets On Saudi Price Cut
Brent crude oil prices plummeted overnight after news that Saudi Arabia had cut its prices for the U.S.
The commodity traded at $82.26 at 9:30 GMT, as investors took the price drop as a signal that the OPEC producer is willing to accept low prices in order to gain market share.
The Wall Street Journal reported that Saudi Arabian officials decided to increase prices for consumers in Asia and Europe, but cut prices to the U.S.
The decision suggests that the nation is committed to regaining market share in the U.S. as the shale boom takes away from outside producers’ positions.
Meanwhile, OPEC members are still at odds over whether they should cut output in order to boost prices, with some members willing to accept low prices in order to gain market share.
Others, like Venezuela, are calling for decreased supplies in an effort to raise prices above the $100 mark necessary to balance their budgets. With the group still divided and its annual meeting coming up on November 27, most are expecting the cartel to maintain its current output level.
Brent prices were also under pressure from a strong U.S. dollar, which climbed even higher after more positive economic data was released on Monday.
U.S. manufacturing PMI figures showed that the nation’s recovery was still on solid ground even as China and Europe continued to struggle. The dollar has been on a high since the Federal Reserve decided to end its quantitative easing program at its October meeting, signaling that the U.S. economy is one step closer to standing on its own.
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