Oil Pares Bear Market Collapse on Prospect of OPEC Curbs in 2019

Oil Pares Bear Market Collapse on Prospect of OPEC Curbs in 2019

Oil Pares Bear Market Collapse on Prospect of OPEC Curbs in 2019

Oil lost nearly a fifth of its value over the past month due to oversupply and signs of a softer-than-expected impact from U.S. sanctions on Iranian crude exports.

Saudi Arabia, the world's largest oil exporter, said on Sunday it would cut its shipments by half a million barrels per day in December due to seasonal lower demand.

Oil producers will continue to evaluate the market data prior to the Vienna summit, "but if we need to trim production by one million bpd, we will do", Falih added.

The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand.

Brent crude oil prices jumped 2 per cent on Monday after top exporter Saudi Arabia announced a supply cut in December, a measure likely aimed at halting a market slump that has seen crude decline by 20 per cent since early October.

"Saudi Arabia can not act alone though - realistically it needs to pull together OPEC allies, and critically Russian Federation, to curb production if it wants prices to hold", he added.

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Oil producing countries should cut output by one million barrels per day to re-balance the market, Saudi Arabia's energy minister said Monday, following a drop in crude prices.

Although there are signs of a glut emerging in the US, the Saudi minister said Sunday it was too early to talk about coordinated production cuts within OPEC+.

In a final statement, they said they had "reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements".

Ahead of the meeting, he acknowledged that so far there was no new deal to cut production among OPEC and non-OPEC producers, who struck an agreement in late 2016 to cut output by 1.8 million bpd to tackle an oversupply crisis.

"There is no consensus yet among oil producers about cutting production", Falih said.

U.S. West Texas Intermediate (WTI) crude oil futures were at 60.73 dollars per barrel, up by 54 cents, or 0.9 per cent from their last settlement.

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When asked about the possibility of an output cut, he insisted it was "premature to talk about a specific action".

Falih said the USA sanctions had removed less oil from the market than expected because of the waivers. They worry that a continued fall in crude oil price will cause a 2014-16 style oil crash when oil price dropped 70%, in large part due to the United States shale oil boom.

"In contrast, if oil prices fall it will benefit the currencies of major oil-importing emerging markets including the Indian rupee and Turkish lira".

The UAE's Mazrouei said the goal of OPEC and non-OPEC cooperation was to strike a balance in the market.

Commerzbank, Germany's second-largest lender, said on Friday that oil producers must act to prevent prices tumbling.

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