Oil prices fall as OPEC meeting remains ‘clouded by uncertainty’

Gladys Abbott
November 30, 2018

Oil prices bounced back to $51/bbl in NY, erasing an earlier loss, after a report that Russian Federation accepts the need to cut production in conjunction with OPEC.

Oil toiled at a more than one-year low at the end of November, its worst month in a decade. Traders remain uncertain about whether the OPEC and non-OPEC producers like Russian Federation will agree to curb output at their Vienna gatherings next week.

U.S. crude oil production rose 129,000 barrels per day (bpd) in September to a fresh record of 11.475 million bpd, the U.S. Energy Information Administration said in a monthly report on Friday. Still, after falling below $50/bbl, a key budgetary marker for USA shale drillers, some traders also saw a buying opportunity, said Bart Melek, head commodity strategist at TD Securities in Toronto.

The market now expects that a cut of 1 million barrels per day would be possible from OPEC and its allies, said John Kilduff, partner at Again Capital in NY.

Brent crude, the global benchmark, was down 65 cents, or 1.1 percent, at $59.56 a barrel by 9 a.m. ET (1400 GMT), after trading as high as $61.27.

The market ended the previous session down 2.5 percent at $50.29 a barrel, after marking its lowest since early October a year ago.

Saudi Arabia is in talks with various oil producing countries to address the volatility in the global crude oil market.

There are several factors that have an impact on oil prices: supply, market anxieties, political impact on trade, the use of technology in production and natural disasters.

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For almost a month-since an OPEC/non-OPEC panel signaled that there might be a need to cut oil production by 1 million bpd to balance the market-Russia has warned against any hasty decisions on new production cuts and has not officially said that a cut is needed.

Brent was down 63 cents at $58.13. However, the Saudi Arabian minister was less confident than previously, and he did not specify an actual cut in oil production.

A slowdown in oil demand growth is compounding the emerging oversupply.

The Russian economy's dependence on oil and gas exports makes it vulnerable to fluctuating prices.


Moscow has so far resisted joining any new production cuts and Falih did not say whether he had heard of any change in Russia's position.

In the U.S., nationwide crude stockpiles rose by 3.58 million barrels last week in their longest such weekly streak since November 2015, according to the Energy information Administration.

US energy firms this week added oil rigs for a third week in four and increased the rig count for the fifth month in a row, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

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