Published: Wed, November 14, 2018
Finance | By Cynthia Curry

Crude oil futures pop higher as Saudi Arabia vows to cut production

Crude oil futures pop higher as Saudi Arabia vows to cut production

Members of Opec, the cartel that pumps about a third of the world's crude, agreed that supply would need to fall by about a million barrels per day next year.

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

After jumping over 1% in early trade, front-month Brent and WTI Crude futures are now trading at $70.70 and $60.63 a barrel, up 0.75% from Friday's closing level.

The United States last week said eight jurisdictions - China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey - would be able to continue buying Iranian oil for six months without fear of USA penalties under sanctions on trading with Iran.

Saudi Arabia, the world's top oil exporter, has been pumping 10.7m bpd since October, according to Falih.

Global appetite for the group's crude will be about 31.5 million barrels a day next year, OPEC said.

Oil prices have since come under downward pressure from rising supplies, despite the new USA sanctions on Iran.

"President Trump was very transparent on the matter as he said bluntly in his first press conference after the mid-term elections that he gave the waivers because he wanted to reduce prices that acted "like a tax" on Americans", he added.

Jakob Christensen, an analyst at Danske Bank A/S:"The combination of a stronger dollar and rising oil prices will create pressures, especially on those emerging markets that are oil importers and have large refinancing needs like Turkey, Argentina, India and South Africa".

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The energy minister of the United Arab Emirates, Suhail al-Mazrouei, now the president of OPEC, said "changes" likely would be necessary as the oil cartel meets in December in Vienna.

Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added.

"The odds of a cut next month seem fairly high and that it will likely be in the 1 million barrels per day range", it says.

Brent crude futures LCOc1 reversed course late in the session, settling down 6 cents at $70.12 a barrel.

Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak.

Saudi Arabia has pumped 10.7 million barrels per day in October, while the figure for Russian Federation and the USA was 11.4 million barrels in each case.

US West Texas Intermediate (WTI) crude futures were at $60.87 per barrel, up 68 cents, or 1.1 percent. "While Saudi Arabia is cutting back output in December, the group may wait to see how Iranian supply and other variables play out before it is able to agree on collective action to prop up prices".

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.

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