DTN Oil

WASHINGTON (DTN) -- Erasing morning gains, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange fell again on Tuesday after Saudi Aramco lowered its official selling oil prices for January loadings to the key Asian market for the first time in seven months, further bolstering the view that market fundamentals are softening heading into the first quarter 2024.

Saudi state-owned giant Aramco sliced the price of its flagship Arab Light crude shipped to Asia by $0.50 bbl for the month of January to $3.50 bbl over Platts Dubai/Oman basket. Aramco further reduced official selling prices for Northwest Europe, down a sizable $2 bbl compared to December loadings against ICE Brent futures. U.S. Gulf Coast buyers saw a more modest reduction of $0.30 bbl to $7.15 bbl over Argus Sour Crude Index.

The price cuts follow another extension of Saudi voluntary production cuts of 1 million bpd into the first three months of next year. The announcement was made in conjunction with voluntary reductions of 1.2 million bpd from the rest of the OPEC+ alliance. Traders mostly shrugged at supportive comments from Saudi and Russian officials this week who attempted to reassure markets that OPEC+ will deliver on the pledged curtailments. Saudi oil minister Prince Abdulaziz bin Salman further added that those cuts "could be absolutely extended beyond the first quarter 2024."

Also on Tuesday, oil traders positioned ahead of the U.S. inventory report to be released by the American Petroleum Institute at 4:30 PM ET followed by official data from the U.S. Energy Information Administration Wednesday morning.

A consensus of analysts and traders surveyed by the Wall Street Journal revealed commercial crude stockpiles likely fell by 1 million bbl during the week-ended Dec. 1 to 448.7 million bbl. Gasoline inventories are expected to have risen by 700,000 bbl to 218.9 million bbl, while stocks of distillates are expected to have gained 1 million bbl to 111.8 million bbl. Refinery use likely rose 0.8% from the previous week to 90.6% of capacity.

Tuesday's macroeconomic data showed lopsided growth at the start of the fourth quarter, with the number of new job openings in the United States having dropped sharply in October, while business conditions in the service industry modestly improved.

The Job Openings and Labor Turnover Survey revealed 8.7 million new jobs were available for the month of October -- the lowest in two years, as employers readjusted demand for available labor with a slowing economy. October's figure is markedly below the record 12.03 million positions reached in March 2022, and is getting closer to the pre-pandemic average of 7 million job openings.

On the other hand, the economy's growth engine -- the services sector -- reported a modest uptick in November, with the headline index in business conditions moving further from contraction territory, while prices eased, and the new orders index surged.

"Things look good for the sector right now with some new opportunity especially moving into the first quarter 2024," said Anthony Nieves, Chair of the Institute for Supply Management.

At settlement, NYMEX January West Texas Intermediate futures declined $0.72 to $72.32 per bbl, while Brent February dropped back $0.83 to $77.20 per bbl. NYMEX ULSD futures for January delivery softened $0.0186 to settle at $2.6411 per gallon, while RBOB futures dropped back to $2.1103 per gallon, down $0.0239.

Liubov Georges can be reached at liubov.georges@dtn.com.