“The combination of coming out of summer peak driving season in the U.S., which is a seasonal factor, has refocused the market’s attention on whether the demand recovery is strong enough – and clearly there are some doubts, as Aramco’s price move has demonstrated,” said Lachlan Shaw, National Australia Bank’s head of commodity research. Also weighing on the market is the upcoming maintenance season for U.S. refineries, which could cut crude demand by 1.5 million to 2 million barrels per day, he said.
WTI and Brent have dropped out of the ranges they were in throughout August, with WTI now below $40 after having traded around $42 for most of the month. Brent has dropped from around $45. The market had been helped by a weaker U.S. dollar, which has since rebounded slightly. “This follows on from worrying signs of a resurgence in COVID-19 cases in other parts of the world. This has raised concerns that the recent recovery in demand may be halted as the general public remains cautious about extended travel,” ANZ Research said. A stronger dollar also weighed broadly on commodities as this makes the greenback-priced oil more expensive to global buyers. A day after thin holiday trade, the greenback was slightly stronger against a basket of currencies and firmed marginally against the euro.