Oil prices nosedived to their lowest since late July on Monday as Saudi Arabia made the largest monthly price cuts pertaining to sales of its crude to Asia, Riyadh’s largest regional energy market.
During a European trading session at about 5:50 GMT, the global benchmark Brent crude LCOc1 dropped by 1.4% to $42.04 per barrel, declining 62 cents for a fourth straight day in its most protracted slide since April's historic oil price collapse.
The US benchmark West Texas Intermediate (WTI) futures CLc1, in turn, were down 63 cents, or 1.6%, to $39.14 per barrel, in a fall that was preceded by WTI plummeting to $38.55, the lowest since 10 July.
The developments came a few days after the US Energy Information Administration reported a 9.4-million-barrel weekly drop in American crude supplies, as well as a fall of 4.3 million barrels in gasoline inventories, something that, however, failed to add to stirring oil prices amid weak demand.
This, in turn, was preceded by the adoption of an OPEC*+ agreement that stipulated global oil production cuts entering into force on 1 May, a few weeks after US crude prices plunged below zero dollars per barrel in a historic drop that also caused the crash of the global oil market.
The 12 April OPEC+ deal obliged the signatories to reduce crude production by 9.7 million barrels per day in May and June. Thereafter, production will be slashed by 7.7 million barrels per day until the end of 2020, and by 5.8 million barrels daily from January 2021 until April 2022.
*OPEC, Organisation of Petroleum Exporting Countries, an energy cartel which includes Saudi Arabia, Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of Congo, United Arab Emirates, and Venezuela. The "+" denotes additional exporters cooperating with OPEC including Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan, and Sudan.