Crude oil prices (BZ=F, CL=F) are falling Monday morning following price cuts on Saudi Arabian suppliers. Yahoo Finance's Madison Mills and Josh Lipton break down the price action.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
MADISON MILLS: Let's get a commodities check, because US crude oil falling nearly 4% in today's trading, reacting to Saudi Arabia slashing prices. The move renewing worries that the market is oversupplied, as demand is weakening. It comes amid record US crude production and softening demand in China. Now, what I find interesting about this today too, Josh, is that one analyst said this is either a demand concern for Saudi, Aramco or it's a move to gain market share, and both of those things are bearish indicators for energy prices.
And this is also amid a lot of volatility in the space. The market seemed to have of bounced back, digested at least some of the geopolitical risks and the Red Sea last week, and then hit with this news from the Saudis this morning. Just bringing back down the energy market. Some really bad performance across the board there, particularly when it comes to crude. Crude futures after the close today down just about, I think that says 3 and 1/2 percent after the close. So that's likely to continue into tomorrow as well.
JOSH LIPTON: Yeah. And just looking at the oil majors here too, Madison. So Exxon was down in today's trade, so was Chevron. And as you mentioned, oil prices actually climbed last week, and that was on these continued worries, as you mentioned about, conflict in the Middle East, the Israel-Hamas war. But there were those two issues today. One, the Saudi news, which is just encouraging these concerns about lackluster demand.
And then we also did have reports that maybe some shipping companies would be making a deal with these Iran-backed Houthi militants to get their ships through the Red Sea. Some back and forth headlines I was seeing on that front too. So that news was also being highlighted as pressuring prices as well. Broadly, by the way, we have seen analysts cutting their oil price forecasts for the year. General idea being here these supplies coming from outside OPEC will be enough to meet growth and demand.
Bloomberg actually had a nice write up on this knowing that among the five big Wall Street banks, only Bank of America, they pointed out, anticipates significant gains this year, forecasting an average of 90 a barrel. City, the most bearish, they said predicting an average of about 75 a barrel.
MADISON MILLS: And that's a big deal when you consider that there are some other names in there. I'm thinking about JP Morgan, for example, that's usually pretty bullish when it comes to oil, and even they are moving their price targets down after some of this news. Also want to mention, survey from this morning showing that oil production last month by members of OPEC had also declined, had also risen, rather. So that's going to increase supply in the space, which is not good when you're seeing some weakening demand. That's also going to drive down some of the trade that we're seeing today when it comes to oil prices.
