(News Bulletin 247) – Oil prices are on a downward trend while Saudi Arabia intends to increase its production of black gold to regain market share, according to information from the Financial Times. Totalenergies and other oil services groups are backing down in reaction to this information.

Leader of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia no longer wants to curb its production to keep oil prices afloat.

Other producers such as the United States, which are not part of this oil cartel, supply the market with their black gold, which weighs on prices. Just like the weak demand from China, which also slows down the possibilities of a price recovery.

The world’s largest oil exporter is therefore ready to abandon its unofficial target of a barrel of oil at $100 in order to regain market share, reports the Financial Times, citing sources familiar with the matter. This lays “the foundations for an increase in production”, says Ricardo Evangelista, analyst at Activtrades.

The Kingdom is in fact now ready to increase its production, continues the British daily. Even if this initiative will further push oil prices down and it does not go in Riyadh’s direction. The Kingdom particularly needs high prices to finance the diversification of its economy towards areas of activity other than oil, such as tourism.

Further downward pressures in the short term

“In addition, reports suggest that Libyan oil could soon return to the market, which would further increase supply. At the same time, markets are increasingly skeptical about the effectiveness of the stimulus measures taken by Beijing to revive the ailing Chinese economy, which has reduced hopes of a rebound in global demand for crude oil,” says Ricardo Evangelista.

“Given the increase in supply and the uncertainty of demand, oil prices could come under further downward pressure in the short term,” continues the specialist.

After losing 3%, oil prices therefore remain under pressure on this information. The November contract on North Sea Brent lost 2.3% to $71.23 per barrel while that of the same maturity on WTI listed in New York lost 2.4% to $68 per barrel.

This fall in oil prices excludes oil stocks from the rebound in the markets, which are benefiting from hopes of new recovery measures from China.

The CAC 40 rebounded by 1.5% despite the 3% drop in Totalenergies, one of the heavyweights of the flagship Parisian index. The oil services group Vallourec returned 2.1%, while Technip Energies lost 1.4% this Thursday around 1:00 p.m.