Published: Thu, November 15, 2018
Markets | By Otis Pena

Crude Down Record 11th Day

Crude Down Record 11th Day

Anxious by a drop in oil prices and rising supplies, the Organization of the Petroleum Exporting Countries is talking again of reducing production just months after increasing it.

Citing the Trump administration's decision to grant the top buyers of Iran's oil a temporary waiver from sanctions imposed on November 5, Al-Falih said the "sanctions didn't cut so much out of the market as anticipated", Radio Free Europe reported.

Saudi Arabia, a prominent member of the oil cartel, said it would cut exports by as much as 500,000 barrels per day (bpd) in November and December to curb oversupply.

OPEC and allied oil-producing countries will likely need to cut crude supplies, perhaps by as much as 1 million barrels of oil a day, to rebalance the market after US sanctions on Iran failed to cut Tehran's output, Saudi Arabia's energy minister said Monday. More than 830,000 contracts had changed hands as of 1:45 p.m. EST (1845 GMT), as funds shed positions with oil dropping to December 2017 lows.

One analyst, Phil Flynn of Price Futures in Chicago, said of Tuesday's sell-off: "It's like a run on the bank".

Oil prices, which spiked in October in the run-up to the reimposition of United States sanctions on Iran's oil industry on November 5, fell after the U.S. granted waivers to eight countries importing Iranian crude for a 180-day period.

Oil prices were hit on Monday after U.S.

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Global benchmark Brent crude oil futures were up 51 cents at $65.08 per barrel by 2:29 p.m ET.

Opec has been making increasingly frequent public statements that it will start withholding crude in 2019 to tighten supply and prop up prices.

Brent ended down US$4.65, or 6.6 per cent, to US$65.47 a barrel, the largest one-day loss since July 2018.

Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown, as seen with the economic contractions in powerhouses Japan and Germany during the third quarter as well as in China's falling vehicle sales. Output, however, rose by 127,000 bpd to 32.9 million bpd, OPEC said.

The richest shale areas in the US will have been exploited by the mid-2020s, meaning the average well drilled in 2025 will be less productive than today, according to the International Energy Agency's annual World Energy Outlook.

US Oil is now at 58.71.

"Opec and Russian Federation are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next Opec meeting on December 6", said Andersson.

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