Oil prices rise as Saudi announces supply cut

14 November, 2018, 06:33 | Author: Kevin Carter
  • Saudi to cut oil exports by 500,000 barrels per day in December

USA crude has lost 28 percent since its early October peak. However, this month, Washington went ahead and granted waivers to 8 of Iran's customers, thereby confounding a market that had been anticipating a very strict enforcement of the sanctions.

Taiwan was flat, Seoul slid 0.3% and Sydney closed up 0.3%.

The sanctions lifted supply concerns and concerns over economic slowdown, which may curb fuel demand.

Saudi Arabia, Russia and the us - the world's top three exporters - have more than compensated for lost Iranian barrels since the start of the month.

The energy minister told reporters that Saudi Arabia believes that OPEC would continue to remain in operation.

Another benchmark, Brent crude futures, dropped to fall below the 69-dollar level.

Falih said Saudi Arabia, the world's largest oil supplier, will cut its production by 500,000 bpd as of next month to help stabilize the market.

On Thursday, the United States granted Iraq a 45-day exemption from sanctions which it reimposed on Iran.

Oil prices were hit on Monday after U.S. President Donald Trump put pressure on the Organization of the Petroleum Exporting Countries not to cut supply to prop up the market.

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

U.S. energy firms last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm said on Friday. Brent also traded lower in post-settlement activity, dropping $1.13 to $69.05 a barrel.

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U.S. crude oil stockpiles in the week ending November 2 increased by 5.8 million barrels, or about 3 percent above the five-year average for this time of year, according to the U.S. Energy Information Administration (EIA). "We need to look at the situation very carefully to see how it will develop so that we don't end up changing our course by 180 degrees every month".

Oil's slide accelerated on Tuesday, with US futures dropping to lows not seen in 11 months due to ongoing worries about weakening global demand, oversupply and sell offs across other asset classes, including equities. The U.S. standard, West Texas intermediate crude, was $60.19, down 21 percent in the same period.

"OPEC+ nations sent a clear signal they are concerned rising supply and weaker demand may keep pushing oil prices down", said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University in NY. OPEC and the IEA (International Energy Agency) are releasing their updates to the oil market this week and the outlook for 2019 was already on the weak side.

The Russian and US presidents met briefly at a lunch Sunday in Paris, where Saudi Arabian issues were discussed, according to White House press secretary Sarah Sanders.

Russian Federation said in November it hit a 30-year high of 11.41 million bpd in October, an increase of about 440,000 from May.

Oil prices, which rose above $85 a barrel in October, fell to less than $70 a barrel last week amid a supply glut.

Meanwhile, investors' sentiment is clouded by uncertainty over how oil demand would develop, as some industry insiders predicted deteriorating demand. "It does appear at least on headline that the consensus is that the price of oil would benefit from less supply heading into 2019".

CaptureU.S. oil rig count, data by YCharts.

The market will keep a close watch on the following US oil inventories.

But the producer nations eased the output cuts in June after signs of a tight market and higher prices, allowing hundreds of thousands of extra barrels into the market.

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