The oil patch rallied today after starting off the day in the red as news hit this afternoon that Saudi Arabia will be targeting the United States with sharp oil export cuts in January.
January WTI traded $0.80/barrel lower this morning, but rallied to settle up $1.43 at $52.58/barrel after Saudi Arabia is reported to target the United States with sharp oil export cuts in an effort to raise prices. Bloomberg reports that the Saudi shipments in January could be cut to 7 million barrels per day, vs. 8 million barrels per day in November. This would be near a 30-year low in exports from the Saudis to the United States. Obviously this had traders scrambling to hit the buy button this afternoon.
After a piercing sell off in oil prices over the past few months, OPEC and other producers decided to collectively cut 1.2 million barrels per day of production. It is unclear yet if this 1 million barrel per day cut by the Saudis to the U.S. is included in this cut, or if the Saudis just decided to effectively cut more production. If this is an additional cut, the market will most likely move higher to capture higher prices after the devastating sell-off we’ve seen which began in early October.
January ULSD settled higher by $0.0256 at $1.8765/gallon and RBOB was up by $0.0578 at $1.4782/gallon.
