Published: Sat, January 12, 2019
Economy | By

Oil prices down after lower-than-expected inventory draw

Oil prices down after lower-than-expected inventory draw

Saudi Arabia announced an increase in its oil and gas reserves on Wednesday, January 9.

"Saudi Energy Minister Khalid al-Falih said it will reduce its exports from eight million barrels per day to 7.2 million and that there will be a further cut of 100,000 barrels per day in February", Essex added.

However, it is unclear to what extent the talks with China and al-Falih's remarks will keep the market buoyed, especially given the U.S. Energy Information Administration reporting that the nation's inventories of gasoline rose by 8.1 million barrels and distillates stockpiles (including diesel and heating fuel) jumped by 10.6 million barrels (crude stockpiles fell by 1.7 million barrels).

Saudi Arabia had a target to lower output to 10.311 million bpd as of January 1, when the supply cut accord took effect.

Al-Falih told reporters in Riyadh the bond is "probably going to be in USA dollars", and having bonds and commercial paper as one of its sources of capital is "prudent and necessary".

Mr Al-Falih played down chatter in the market that Aramco would fund the entire US$70 billion Sabic deal with the bond offering. That figure is "more than sufficient to bring balance to the market", said Falih, adding that the production cut would trim excess supply from the market.

Brent and the world's other benchmark crude, West Texas Intermediate, both slumped late a year ago to 18-month lows of US$49.93 and US$42.36 per barrel respectively.

Saudi Arabia has revealed a rise in crude oil reserves following an independent audit, lifting the lid on deposits that have been the subject of intense speculation since the Kingdom revealed plans to sell shares in its national oil company.

The energy ministry said that Saudi reserves were 268.5 billion barrels of oil and 325.1 trillion standard cubic feet of gas at the end of 2017, Arab News reported, citing the official Saudi Press Agency.

Saudi Arabia's reserves of easily recoverable oil have always been the world's largest but few details were public.

That the carbon intensity of Saudi Arabia's oil and corresponding gas flaring are among the very lowest in the world, and he called on the industry to use this metric alongside profitability.

The kingdom on Wednesday raised US$7.5 billion, half of the amount it plans to borrow in 2019, said HSBC, one of the banks involved in the operation. They said that the central bank will be especially cautious about pushing ahead with interest-rate increases after raising them four times previous year. But demand was high, at US$27 billion, according to HSBC.

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