Saudi Arabia Raises Official Selling Prices: How Will This Impact the Energy Market?

Despite facing downward pressure yesterday, the energy market has found stronger support this morning as Saudi Arabia increased its official selling prices for crude. The oil market sold off despite US President Trump’s directive to increase economic pressure on Iran, focusing instead on the tariff story. The EIA’s weekly inventory report showed a large increase in crude oil stocks, driven by strong imports and increased output.

Today, oil prices are holding up better as Saudi Arabia raised its official selling prices for all grades and regions for March loadings. This ties in with the strength seen in the Middle East physical market since the beginning of the year. European prices also saw renewed strength yesterday, with forecasts for colder weather leading to concerns of steeper draws in gas storage.

In the metals market, gold hit another fresh record high amid trade war concerns, higher inflation, and slower economic growth. Central banks’ buying of gold last year exceeded 1,000 tonnes for the third year in a row, with demand coming from a range of emerging market banks.

In the agriculture sector, Arabica coffee extended gains for an eleventh consecutive session, hitting a new all-time high due to ongoing supply concerns, especially in Brazil. Exchange inventories are falling, and the next harvest is expected to be impacted by bad weather.

Analysis:

The increase in Saudi Arabia’s official selling prices for crude could indicate a bullish trend in the energy market, providing support for oil prices. However, concerns over trade tensions and the impact of colder weather on gas storage could lead to volatility in the market. In the metals market, gold continues to rally due to uncertainties surrounding trade wars and central banks’ buying. In agriculture, the tight market conditions for Arabica coffee signal potential price increases due to supply concerns in Brazil. Investors should monitor these developments closely to make informed decisions in the market.