Oil was whacked lower in late trading in European and US trading after Saudi Arabia again surprised by cutting prices for US customers.
The Saudi’s oil company revealed price cuts of up to 50 cents a barrel, depending on the crude type.
It is the second time the Saudis have cut prices to key customers – Asian clients received discounts a month or so earlier.
The latest cut shocked the market because it confirmed that the Saudis will not cut production to keep prices, but will chase and protect market share.
US Nymex West Texas type December crude oil futures fell $US1.76, or 2.2%, to close at $78.78 a barrel, the lowest close for a front month contract since June 2012.
Oil prices fell further in after hours dealing and ended down 2.8% at $US78.30.
Brent crude in London fell 1.6% to a four year low of $US84.53 and the price falls will add to growing concerns about the deflationary impact of falling oil prices.
The weakness means oil has fallen another notch – emulating gold which lost more ground overnight, adding around $US6 to the $US50 or so it lost on Thursday and Friday of last week.
Oil prices were helped lower by another rise in the value of the US dollar, which is being pushed higher by the sliding Japanese yen. That’s why the Aussie dollar fell under 87 US cents this morning to trade around 86.90 US cents.
The Dow and other major US indices were weaker, following markets in Europe lower. Our market will start flat to slightly lower in a session that will be light because of the Cup holiday in Melbourne.
