Wednesday, 11 December, 2019

Oil prices surge as Saudi seeks more supply cuts

Iraq says OPEC & allies may extend oil output curb to 1.6 million bpd Iraq says OPEC & allies may extend oil output curb to 1.6 million bpd
Ginger Lawrence | 03 December, 2019, 21:58

Many experts concur that the group, dubbed as OPEC+, should make deeper cuts to the current oil production level to boost crude oil prices.

Brent crude futures gained 17 cents to $61.09 a barrel by 1:14 p.m. EST (1814 GMT).

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Oil prices surged on Tuesday in the global markets following speculations that the world's largest producer, Saudi Arabia is pressing for more supply cuts as members of the Organisation of Petroleum Exporting Countries and its allies (OPEC+) converge this week on Vienna, Austria.

"I have no deadline, no".

Saudi Arabia is pushing the plan to deliver a positive surprise to the market before the initial public offering of state-owned Saudi Aramco, the sources said.

Business a.m learnt that OPEC and its allies are in talks to further increase the existing supply cut of 1.2 million barrels per day (bpd) by 4,000 bpd with an extension till June 2020.

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"(The) oil price is little moved today, suggesting that traders are skeptical about the additional 400,000 BPD cut on top of the extension of (the) current production cut agreement", said Margaret Yang, market analyst at CMC Markets in Singapore.

The factors behind this view included a large increase in production from legacy non-OPEC projects and a still uncertain outlook for demand growth, it added.

Also, the bank in anticipation hopes that Brent would sell within the $60 per barrel mark in 2020 irrespective of "absent new growth or geopolitical shocks" that might arise.

While OPEC may cut output, U.S. producers have been only too happy to meet any market shortfalls, with production set successive records. Trump said he was willing to wait another year to sign a trade deal with China.

US crude oil inventories likely declined by 1.8 million barrels last week, according to six analysts polled by Reuters.

OPEC's de facto leader Saudi Arabia will agree to lower its quota to 10 million bpd from 10.3 million bpd and will press other producers, particularly Iraq, Nigeria and Russian Federation, to improve their compliance with previous commitments, JPMorgan analyst Christyan Malek wrote in the note.