ibusinesslines.com December 16, 2018

Oil Prices Driven by Egos, not Economics - United FCG

03 December 2018, 04:39 | Kelvin Horton

Saudi minister: OPEC+ deal 'supports global economy'

Gulf OPEC members covered output gap left by Iran on Trump’s call

Saudi Arabia led suppliers to cut production two years ago to curb a glut, then reversed course in June on concerns that US sanctions on Iran could create a shortage.

US oil production surged to a new record in September, adding more pressure on OPEC and its allies to cut supply at next week's meeting.

Oil was jolted higher by efforts across the globe to support prices as Saudi Arabia and Russian Federation extended their pact to manage the market and Canada's largest producing province ordered unprecedented output curbs. The comments open the door for a deal at the OPEC meeting next week in Vienna.

On Thursday, the price of NY crude ducked below $50 per barrel for the first time in nearly 14 months.

Prices, however, significantly pared much of their early Friday losses as speculation has grown over a potential production cut by major oil producers, ahead of the OPEC meeting.

OPEC, which pumps four-in-10 barrels produced worldwide, will convene in Vienna on December 6 to discuss output cuts after oil prices in November suffered the largest monthly drop since the global financial crisis in 2008.

Outside OPEC, Russian oil output stood at 11.37 million bpd in November, down from a post-Soviet record of 11.41 million bpd it reached in October, Energy Ministry data showed on Sunday.

The U.S. output surge will weigh heavily in discussions this weekend at the G-20 summit as well as at next week's meeting of OPEC and its allies.

The market is closely watching the planned OPEC meeting which is scheduled to hold on Thursday.

Both main contracts have plunged by about a third since hitting four-year highs at the start of October, hit by a number of factors including easing demand, high production, softer-than-expected USA sanctions on Iran and a global growth slowdown.

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

France's President Emmanuel Macron, who has faced intense protests against growing gasoline prices in his country, also called for cheaper oil at the G-20 summit. The January contract expired on Friday after declining 1.3 percent. Brent crude rose 5.3 percent or $3.14 to a high of $62.60 and was last trading around $61.60. February Brent settled at $US59.46, down 45 cents, or almost 0.8%.

OPEC will meet on December 6 in Vienna to deliberate on the output cut after the oil price slumped to the biggest monthly drop since the global financial crisis in 2008.

According to the government, production capacity in Alberta now exceeds transportation capacity by 190,000 barrels a day, and there are 35 million barrels of crude in storage, double the normal level.

Meanwhile, the number of active drilling rigs in the United States decreased by three to 1,076 in the week ending November 30.

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