Published: Wed, November 14, 2018
Markets | By Otis Pena

Oil prices rise as Saudi announces supply cut

Oil prices rise as Saudi announces supply cut

Prices have since tanked, entering bear-market territory, helping prompt OPEC to consider production cuts.

This put the Middle Eastern country at odds with Russian Federation, which said it was no clear whether the market would be oversupplied next year, with market analysts predicting the country's oil producing companies likely to BOOST proaction by 300,000 barrels per day. "We are not in the business of pinpointing a price going forward".

Other oil-market news Gasoline futures rose 1.5% to settle at US$1.6367 a gallon.

"Equities and oil were pretty much falling in lock-step", said Josh Graves, senior market strategist at RJO Futures in Chicago.

"There is no consensus yet among oil producers about cutting production", Falih said.

Meanwhile, Sultan Ahmed al-Jaber, the head of the state-run Abu Dhabi National Oil Co., said the UAE planned to increase oil production to 4 million barrels a day by 2020 and 5 million barrels a day by 2030.

The group's caution arises partly from the unpredictability of Iranian supply.

Declines extended after the United States said on Monday it would allow eight countries to continue buying sanctioned Iranian crude, the Wall Street Journal reported. That confounded a market that was anticipating a stricter enforcement.

Crude oil prices attempted to rebound on Monday, rising in the morning after Saudi Arabia signaled production cuts. "So, it's in OPEC's best interest to tame the current supply glut".

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Root added that commodity prices that are influenced by cartels such as OPEC, which controls almost a third of global oil production, do not necessarily rise and fall with economic cycles.

Oil prices have shed a fifth of their value in just one month after surging to a four-year high in early October, driven by a combination of factors centred on higher supply and fears of sluggish demand.

Both WTI and Brent futures are up 0.75%, having jumped more than 1% in initial trade. Speaking in Abu Dhabi, he said that Saudi Arabia's announcement would now "probably firm the price".

The UAE's Mazrouei said the goal of OPEC and non-OPEC cooperation was to strike a balance in the market.

Saudi Arabia may also struggle to convince other producers to follow its lead.

Al-Falih said that demand for Saudi crude was weaker for the first time since the kingdom started boosting production in the May-June period.

The Trump administration has been counting on Saudi Arabia to assure oil supply to prevent a run-up in prices post snapback of Iran sanctions. "We're seeing some signs of this coming out of the U.S. We have not seen the signs globally, nor can we predict that they will persist into 2019".

Russia's Novak said it's "hard to say" if oil markets will be over-supplied next year.

"I think we would have to wait and see how the market is unfolding because our ultimate goal is market stability".

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