Crude oil prices were trending down earlier today, extending a two-day losing streak as bearish news crowded out any bullish signals.
Earlier in the week, news emerged that the rival governments in Libya had struck an agreement about the appointment of a new central bank governor, signaling oil production and exports would soon return to normal, alleviating supply squeeze concerns.
The latest blow to prices came from Saudi Arabia. On Thursday, the FT reported citing unnamed sources that the kingdom considered dropping its oil price target of $100 per barrel and instead focusing on regaining lost market share by boosting supply.
The price target is not official but it is the level that the IMF earlier this year said Saudi Arabia needs oil prices to be in order to balance its budget. This balance is based on all the high-ticket projects that Crown Prince Mohammed bin Salman is spearheading as a way of diversifying the local economy away from oil.
The FT report suggests the Saudi leadership has rearranged its priorities and is now resigned to lower prices for longer.
The effect of the Saudi news was amplified later on Thursday when Russia’s Deputy Prime Minister Alexander Novak said Russia planned to stay on course with OPEC+ plans, meaning it would start bringing some supply back in December, like Saudi Arabia.
The OPEC+ alliance is not discussing any proposals for changes to its current oil production plan, which envisages the group starting to add supply to the market in December, Novak told media, suggesting other members of the group were also resigned to lower prices and were about to prioritize market share now.
“The big-ticket items on the market's radar this week have been Libya and OPEC+,” FGE Energy said, as quoted by Reuters, as Brent crude looked set to end the week close to 5% lower than where it started it, and West Texas Intermediate was on course to book a loss of over 6%.
