UPDATE 3-Oil dips as oversupply outweighs Saudi royal reshuffle – Reuters


* Saudi reshuffle affects Aramco CEO, chairman

* Trading freezes as market awaits reshuffle impact on oil
policy

* Analysts expect prices to remain low, but volatile

* Prices for put options higher than for call options

* Put options open interest also higher than for call
options

(Updates prices, drop in liquidity)

By Henning Gloystein

SINGAPORE, April 29 (Reuters) – Oil prices dipped on
Wednesday as oversupply outweighed political uncertainty in
Saudi Arabia where King Salman relieved the crown prince as well
as several senior ministers and the chief executive of national
oil company Saudi Aramco.

In a surprise move, Saudi King Salman bin Abdulaziz on
Wednesday sacked his younger half brother as crown prince and
appointed his nephew, Deputy Crown Prince Mohammed bin Nayef, as
the new heir apparent, state television said.

He also appointed his son, Prince Mohammed bin Salman, as
deputy crown prince, and replaced veteran foreign minister
Prince Saud al-Faisal with the kingdom’s Washington ambassador
Adel al-Jubeir as well as appointing several other new
ministers.

In another move, Khalid Al-Falih, chief executive of Saudi
Aramco, was appointed as health minister and switched to become
the national oil company’s chairman, a position previously held
by veteran oil minister Ali al-Naimi.

Internal reshuffles in Saudi Arabia often move oil prices as
stability in the world’s biggest oil exporting country is key to
global supplies.

Traders said they were closely observing who would become
Aramco’s new CEO and whether oil minister Naimi’s position would
be affected.

Naimi, who is 79 years old and has been oil minister since
1995, has seen several oil price crashes in his tenure.

He is seen as have played a crucial role in Saudi Arabia’s
decision last November not to cut production in support of
prices, which have halved since June 2014.

Despite the Saudi announcements and uncertainty, benchmark
Brent crude futures dropped 19 cents from their last
settlement to $64.45 a barrel by 0358 GMT.

Activity slowed sharply and prices moved very little as
traders were reluctant to take on new positions before there was
more clarity whether the reshuffle would affect Saudi oil
policy.

U.S. WTI crude, less affected by the Middle East than
internationally traded Brent, was down 18 cents at $56.88 a
barrel.

Outside politics, analysts said that fundamentals pointed to
ongoing weakness, although price volatility was seen to be high.

“Despite a 45 percent rally in oil prices from their January
lows… we do not think the commodity cycle is turning
conclusively just yet and expect a lot of price volatility
ahead,” Barclays said in its quarterly commodity review,
published on Wednesday.

“However, supply growth in many markets is still too rapid
and high inventory levels are likely to be a drag on prices for
some time,” it added.

(Editing by Ed Davies and Richard Pullin)

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