Oil prices climb on prospect of OPEC and Russian cuts

Lloyd Doyle
November 19, 2018

Traders said futures pared losses on bullish stockpile data Monday as they said that energy information provider Genscape reported that crude inventories fell in the week ended Friday.

"Oil prices continued to recover ..."

Brent crude futures fell in choppy trade on Monday, under pressure from growing supply but supported by a reported drawdown of USA oil inventories, potential European Union sanctions on Iran and possible OPEC production cuts.

Novak said on Monday that Russian Federation, which is not an OPEC member, planned to sign a partnership agreement with the group, and that details would be discussed at OPEC's December 6 meeting in Vienna.

Alexander Novak, Russian Energy Minister, stated that Russia, which is not an OPEC member, meant to sign a partnership agreement with the group.

Here's a good chart from Bloomberg, it shows oil net shorts at the most-extreme since this time past year.

Oil has slipped into a bear market after reaching a four-year high last month. "It is not unreasonable to anticipate stable prices until then", Tamas Varga, PVM Oil Associates strategist, said.

The Organization of the Petroleum Exporting Countries (OPEC), de-facto led by Saudi Arabia, is pushing for the producer group and its allies to cut 1 million to 1.4 million barrels per day (bpd) of supply to adjust for a slowdown in demand growth and prevent oversupply. Trade tensions between the USA and China escalated over the weekend, adding to worries supply may overtake consumption. The more-active January contract gained 16 cents to $56.84.

Front-month Brent crude oil futures were at $67.41 per barrel at 0746 GMT, up 65 cents, or 1 percent, from their last close. The Saudis need an oil price of $73.30 a barrel next year to balance the fiscal budget, according to the International Monetary Fund.

Russia's President Vladimir Putin said last week that "it is obvious that we should cooperate and we will cooperate" with OPEC, but refrained from commenting on whether there is need to reduce oil production.

U.S. energy firms added two oil rigs in the week to November 16, bringing the total count to 888, the highest level since March 2015, a weekly report by energy services firm Baker Hughes said on Friday. USA crude production has been rising, hitting a record in the week ended November.

Russia-which together with Saudi Arabia and some Arab Gulf producers has been raising production since June to offset Iranian losses-saw its oil production set a new post-Soviet record high of 11.41 million bpd in October, up from 11.36 million bpd in September.

The speculator group cut its combined futures and options positions on USA and Brent crude during the week ended November 13 to the lowest since June 27, 2017. The Cboe/Nymex Oil Volatility Index fell more than 3% on Friday, declining for a third day. Contributions of 200 words or more will be considered for publication.

Other reports by Iphone Fresh

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