On Monday, oil prices fell to the lowest level since July after Saudi Arabia slashed monthly price cuts for supply to Asia as the optimism regarding demand recovery faded amid the coronavirus pandemic.
By 00.00 GMT, Brent crude oil futures slumped by 2.1% or 91 cents to USD41.75/barrel while earlier it hit its lowest level since July 30, at USD41.51/barrel. Likewise, the US WTI also dropped by 91 cents or 2.3% to USD38.86/barrel while initially, it hit the lowest level since July 10 at USD38.55/barrel.
Saudi Arabia slashed the October official selling price (OSP) for Arab Light crude it sells to Asia by the biggest margin since May, signaling the fading confidence in global crude demand.
Other than that, another factor attributing to the fall today was the figure from Baker Hughes which showed that US energy companies had added oil and natural gas rigs for the second time in the past three weeks in the week ended September 4.
ANZ analysts noted that investors are now facing the fact that demand has remained lackluster with the US Labor Day holiday marked the end of the summer driving season.
Despite the Organization of Petroleum Exporting Countries and its allies (OPEC+) to cut output, along with government efforts to stimulate the global economy and oil demand, the world remained awash with crude and fuel supplies.
