Latin America Energy, Oil and Gas, News and Information

Gladys Abbott
December 3, 2018

The amount being cut is more than the total production of each of OPEC's three smallest members: Equatorial Guinea, Gabon and the Republic of Congo.

Oil prices jumped by more than 5 percent on Monday after the United States and China agreed to a 90-day truce in a trade dispute, and ahead of a meeting this week of the producer club OPEC that is expected to cut supply.

The reason behind the increase in oil production by Saudi Arabia and other producers in the past few months is because of the USA sanctions over the Iranian oil exports, but the waivers provided by the US allowed Iran to export fewer barrels in the market than expected.

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.

Russian President Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud shared a hearty handshake at the G20 summit in Argentina because they have good personal relations, Kremlin Spokesman Dmitry Peskov told reporters, TASS reports.

While there was no announcement on how much would be cut and for how long, the pact between the world's two biggest crude exporters was cheered by oil traders, with Brent jumping USD 2.42 to USD 53.35 and West Texas Intermediate up USD 2.60 at USD 62.06 on Monday.

On Friday, oil prices extended losses as piling stockpiles further dampened entrenched concerns over supply surplus, offsetting to some extent market expectations on potential output cut from OPEC and its allies.

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IG Market Analyst, Kyle Rodday says the news post-OPEC meeting could be significant.

But since reaching four-year highs in October, oil prices have plunged around 30 percent as worries about falling demand in a slowing world economy have taken their toll.

That growing belief saw oil prices trim early falls on Friday.

USA crude oil CLc1 was up $1.37 a barrel, or 2.7 percent, to $52.37 a barrel as of 6:07 p.m. EST (2307 GMT), while Brent LCOc1 , the global benchmark, gained $1.31 a barrel, or 2.2 percent, to reach $60.77 a barrel. The January contract rose about 1% for the week. It ended November down around 20.3%. The volume reduction can range from 1.0 to 1.4 million barrels./day. The cable broadcaster reports that USA crude oil prices have crashed nearly 26 per cent from their peak in October as fear of a shortfall in supply has turned into talk of a glut.

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.

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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