Oil extended its retreat below $40 a barrel after Saudi Arabia cut pricing for October crude sales as the summer driving season winds down with many countries still struggling to control the coronavirus.
Futures in New York dropped 1.5% in Asian trading after Saudi Aramco reduced its key Arab Light grade by a larger-than-expected amount for shipments to Asia in a sign that fuel demand in the largest oil-importing region is wavering. The kingdom also lowered prices to the U.S. for the first time in six months.
West Texas Intermediate, the American crude benchmark, fell 7.5% last week in its biggest loss since June amid nervousness over demand and a rout in stocks. While infection rates in the U.S. are slowing, the pandemic appears to be staging a comeback in parts of Europe and cases in India are still surging.
After trading in a narrow range for the past three months, crude is off to a poor start in September amid a still-tepid demand backdrop and a continued increase in output from the OPEC+ alliance. Chinese crude imports fell for a second month in August, and the world’s biggest importer is expected to purchase much less in September and October than it did in May and June as independent refiners run out of quota after a buying binge earlier this year.