Crude Dropping on Saudi Price Cuts

Saudi Arabia Cuts Selling PriceOil prices came under pressure on Monday as traders digested news of fresh price cuts from de-facto OPEC leader Saudi Arabia.  The kingdom slashed the official selling price of its leading product, Arab light crude, it its lowest level in over two years. The price cuts come on the back of data showing that OPEC output rose last month, despite the group announcing a commitment to fresh cuts.OPEC DivisionsOPEC adherence has been in question recently in light of the recent break from tradition for OPEC. At the last meeting, the group announced fresh cuts though outlined that exact levels would be determined and announced by each member rather than the group of producers adhering to a cartel-wide quota as has typically been seen. There has been plenty of talk of division within OPEC recently with some members pushing back against Saudi’s calls to up production cuts.USD in FocusWith production rising and the Saudi selling price being cut, oversupply concerns are being negated for now, leading to fresh downside in crude prices. Looking ahead this week, focus will also be on movements within the US Dollar. Thursday’s inflation data has the potential to drive plenty of USD volatility which might see crude prices sold further if the greenback rises.Technical ViewsCrudeThe rally in crude prices has stalled for now into a test of the bear channel highs and the 72.61 level. With price now dropping sharply from the level, the focus is on a fresh test of the 66.79 level next. This is a major multi-year support level for the market which, if broken, will mark a firmly bearish development.