Prices of oil were mixed on Tuesday with Saudi Arabia’s sharp cuts in crude contract prices for Asia causing fears about a weaker demand. Strong Chinese economic data, however, capped losses.
Tamas Varga of oil brokerage PVM said that the deep cut in Saudi OSP and the aftershock of Friday’s disappointing U.S. Employment data that strengthened the dollar yesterday were enough to put bulls on the backfoot.
On Sunday, Saudi Aramco (SE:2222) slashed October official selling prices (OSPs). That was for all its crude grades sold to Asia by at least $1 a barrel.
The deep price cuts come as pandemic-induced lockdowns across Asia have clouded the economic outlook.
By 0947 GMT, Brent crude futures were up 12 cents, or 0.2%, to $72.34 a barrel after falling 39 cents on Monday. U.S. West Texas Intermediate crude was priced at $68.83 a barrel. That was down 46 cents, or 0.7%, from Friday’s close. Moreover, that had no settlement price for Monday due to the Labor Day holiday in the United States.
The U.S Jobs report also showed the least number of jobs in seven months in August. This was because hiring in the leisure and hospitality sector slowed down amid a COVID-19 resurgence. A stall in this sector weighed on demand at restaurants and hotels.
Oil prices, however, were supported by strong Chinese economic indicators. They were bolstered by continued outages of U.S. supply due to Hurricane Ida.
China’s Iron Ore Hit New Heights
The value of China’s iron ore imports rose to new heights in August. This was despite policymakers trying to cut steel production and calm commodity prices. That is likely lifting Australia’s exports despite the tensions between the two nations.
In August, China imported Iron ore worth $20 billion as prices surged from a year earlier, according to government data on Tuesday. Moreover, total volumes were 97.5 million tons.
Gold Down but still Above $1,800
In Asia, gold was down on Tuesday morning but remained above the $1,800 mark. The dollar weakened, with investors anticipating that the U.S. Federal Reserve will delay the start of asset tapering.
By 12:19 AM ET (4:19 AM GMT), gold futures rose 0.52% to $1,824.25. In the previous week, it hit a two-and-a-half-month high over a disappointing U.S. jobs report.
In India, gold imports in August nearly doubled year-on-year. According to a government source, strong demand and weaker prices prompted jewelers to increase purchases for the upcoming festive season.
Meanwhile, silver firmed 0.4% to $24.76 per ounce. Palladium was flat at $2,410.52, while platinum advanced 0.1%.
