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Oil rises after Russian Federation leans toward cut

01 December, 2018, 06:29 | Author: Sara Gill
  • Oil has remained in an oversold territory this month and seesawed near the US$50 threshold this week- a key budgetary marker for shale drillers

Oil prices edged lower on Friday due to concerns of oversupply but losses were limited by expectations that the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation would agree some form of production cut next week.

Although today's early sell-off contributed to the largest one-month decline in crude oil since the financial crisis of 2008, the intraday technical reversal is the first sign in weeks that the buying may be greater-than-the-selling at current price levels.

Abuja/Moscow: Saudi Arabia will not cut oil output on its own to stabilise the market, Energy Minister Khalid al-Falih said on Wednesday as Nigeria and Russian Federation said it is too early to signal whether they would join any production curbs.

To rein in the glut, OPEC and its main partner Russian Federation are discussing supply cuts and are due to meet in Vienna on December 6 and 7 to agree production strategy.

Saudi Arabia is confident that OPEC and its allies can reach a deal to stabilize the market when they meet next week.

Earlier in the day WTI Crude had breached the $50 support level for the first time in more than a year, following yet another US crude inventory build that the EIA reported on Wednesday.

OPEC and its allies will be meeting amid concerns over a slowing global economy and rising oil supplies from the United States, which is not involved in the existing pact.

The kingdom can ill-afford another slump in oil revenues so soon after the last one, which suggests it will have to cut production, while trying to cajole other OPEC and non-OPEC countries to share the burden.


US stockpiles were expected to build again in the latest week, traders said, citing data from energy information service Genscape.

The worldwide benchmark for crude, Brent futures that expire in January were down by 2.4% to trade at a price of $58.76 per barrel on the ICE Futures Europe Exchange in London. To this end, the group will be contemplating cutting oil output by 1 million barrels of oil per day.

The oil price "fell and then rose again but in my opinion, a level around $60 is quite acceptable, we are completely satisfied", he told an investment forum.

The country's resilience is often credited to low oil production costs and a weakening rouble which allows for attractive exports.

US crude inventories hit their highest in a year, and are now only 80 million barrels below March 2017's record 535 million barrels, according to the Energy Information Administration.

The ongoing United States trade war with China is likely to occupy the top billing.

Also, increased cautiousness ahead of Friday's Trump-Xi meeting on trade keeps the black gold on the defensive.

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