Oil prices slip on concerns of looming oversupply, economic downturn

Ann Santiago
November 16, 2018

USA oil prices rebounded 1.01 percent Wednesday on hope of production cut by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Opec is meeting on December 6 and is expected to decide then whether to carry on the production cuts.

OPEC and its allies are considering cutting oil output by more than the 1 million barrels a day Saudi Arabia proposed earlier this week as the group is increasingly anxious about the potential for oversupply, people familiar with the matter said. The cartel and its partners are considering reducing output by more than the 1 million barrels a day Saudi Arabia proposed earlier this week, people familiar with the matter said.

He eschewed a direct response on Wednesday on whether curbs were needed, saying oil prices were adjusting after being hit by initial uncertainty about production in Iran, which later benefited from export waivers from USA sanctions.

Crude in the USA dipped below US$55 a barrel this week for the first time in a year amid renewed fears of a glut, with domestic production at record-highs, rising OPEC output and waivers meant to ease the impact of sanctions against Iran.

Futures in NY fell were little changed after recovering slightly on Wednesday from a 17.6% slide over the previous 12 sessions.

He urged the Federal Government to put in place measures to improve oil production, adding that OPEC will soon exempt Nigeria from crude oil cut imposed on the country and Libya since a year ago.

Prices may be oversold technically, but it's going to take a major change in the fundamentals to flip this market.


Brent dropped US$1.97 a barrel, or 2.8 per cent, to a low of US$68.15 and was trading at around US$68.40 by 1045 GMT. Inventories in industrialized nations have expanded for four straight months and are set to continue rising, according to the International Energy Agency.

Another large Russian oil producer, Gazprom Neft, is ready to lift output by a further 20,000-30,000 bpd this year and by 50,000 bpd next year.

According to the report, OPEC crude output went up to 32.99 million barrels per day in October, "up 240 kb/d on a year ago".

"We are talking about a cut from everyone, including Nigeria and Libya because their production has exceeded the cap in recent months", one source said.

Novak was speaking at an industry event in Singapore and said, "The market is quite volatile today".

"The market now increasingly looks concerned about the prospect of too much supply", said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.

Putin was more upbeat on the current market situation than his colleagues in OPEC, saying "where it is now, where it was recently, anything around $70 suits us completely".

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