NEW YORK • Oil extended losses yesterday after Saudi Arabia slashed crude prices for Asian buyers by a larger-than-expected margin, just days after the Organisation of the Petroleum Exporting Countries and its allies agreed to continue raising production.

Futures in New York remained below US$69 a barrel at 5pm in Singapore yesterday after falling 1 per cent last Friday. The October price for Saudi's flagship crude was cut by US$1.30, more than double the forecast reduction.

Traders were surprised by the move, attributing it to factors including arbitrage inflows and competition to retain market share.

After rallying in the first half of this year, crude's surge has stalled as the market weighed both bearish and bullish signals.

New Covid-19 variants and the readiness of governments to release strategic reserves weighed on investor sentiment, even as a decline in global crude inventories and record-high US fuel consumption added to optimism.

Asian buyers had to submit their requests for October volumes by yesterday. Official Saudi prices for cargo sales to the US, North-west Europe and the Mediterranean were stable or little changed, pointing to the producer's intent on prioritising oil flows to Asia.

Last month, some Asian customers requested lower Saudi volumes as the Delta variant prompted the return of movement curbs. Still, Opec and its allies expect that global oil markets will continue to tighten this year even as they revive output, before flipping into surplus again next year.

Separately, traders are closely watching for the return of oil production and refineries affected by Hurricane Ida. The US granted a second refiner in Louisiana access to the country's emergency crude stockpiles as most oil-producing platforms in the Gulf of Mexico remain offline.

BLOOMBERG