Published: Sun, December 02, 2018
Finance | By Loren Pratt

Russia, Saudi agree to renew oil output cuts: Putin

Russia, Saudi agree to renew oil output cuts: Putin

The two benchmarks, North Sea Brent and USA crude, still have had their weakest month in more than 10 years in November, losing more than 20 percent as global supply has outstripped demand.

"You're going to have a ballet and concert of various statements that are either contradictory or reinforcing leading up to the OPEC meeting", said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. Losses were limited on Friday, however, on hopes of a production cut agreement. “Even if production is cut, concerns about slowing demand could still weigh on prices.”.

On Friday, West Texas Intermediate crude for January delivery CLF9, -1.42% on the New York Mercantile Exchange fell 52 cents, or 1%, to settle at $50.93 a barrel after trading as low as $49.65. The contract rose 1.1 percent from last week.

Prices of the global benchmark, Brent crude went tumbling about a third from an October high due to multiple reasons including rising supply from the US shale regions, Saudi Arabia and Russian Federation, slower demand growth and American waivers on oil sanctions on Iran. At the opening of Brent was trading at 59,73 per barrel, up 18 cents below the closing level ($59,91). It ended November down around 22%.

The price of a barrel of Brent crude in February was $60,23 (+0,53%).


Both WTI and Brent suffered their biggest monthly percentage declines in about a decade, according to Dow Jones Market Data.

Heading into the OPEC meeting, “it wouldn't be a surprise to see crude prices stabilize, or even recover, as speculation for a cut grows, particularly if the relevant officials continue to strike an optimistic tone, ” said Marios Hadjikyriacos, a market analyst with broker XM.

Thus, Saudi Arabia suggested output be decreased in 2019 by one million barrels a day and said it is ready to curtail exports from December. "Against this backdrop, the most likely outcome of next week's OPEC meeting is a fudge".

In the meantime, US estimated oil output has increased by 11.7 Million bpd.

The oil reserves in the US increased by 3.6 million barrels in the week to 23 November to 450,49 million barrels, according to the worldwide energy Agency.

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