Published: Wed, November 14, 2018
Money | By Armando Alvarado

Falih: Saudi Arabia to cut December oil output by 500000 bpd

Falih: Saudi Arabia to cut December oil output by 500000 bpd

However, it warns this could see some push-back from USA president Donald Trump. Initial volumes of 300,000-350,000 bpd are about 100,000 bpd higher than Plains All American's previous estimate.

Brent crude futures were up 70 cents at $70.88 a barrel by 11:05 a.m. EST (1605 GMT), following four sessions of losses.

The United States re-imposed sanctions against Iran's oil exports, which had been lifted under the landmark 2015 nuclear agreement to curtail Iran's nuclear program.

The proposed reduction is from October production levels, Falih said.

The sanctions lifted supply concerns and concerns over economic slowdown, which may curb fuel demand.

Quevedo was speaking in Abu Dhabi where an oil market monitoring committee was held on Sunday, attended by top exporters Saudi Arabia and Russian Federation.

Taiwan was flat, Seoul slid 0.3% and Sydney closed up 0.3%.

Second, the Trump administration granted temporary waivers to China, India and other countries to keep buying oil from Iran. That confounded a market that was anticipating a stricter enforcement. However, with the Trump administration offering waivers and allowing eight big oil importers to continue buying Iranian oil, and the consistent increase in US crude inventories have been dragging down oil prices since October 29.

Saudi Arabia expressed the need for oil producers to cut 1 million barrels a day from October levels and announced fewer shipments from next month, as the Organization of Petroleum Exporting Countries (Opec) and its allies began laying the groundwork to reduce oil supply in 2019, reversing an nearly yearlong expansion. Brent crude needs to fetch around $89 a barrel in order for the kingdom to balance its 2018 budget, according to Bank of America Merrill Lynch. Prices for both WTI and Brent crude - the USA and worldwide benchmarks, respectively - have plunged about 20% since early October.

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US gasoline inventories increased by 1.9 million barrels, while distillate fuel inventories decreased by 3.5 million barrels, EIA said. The rupiah's plunge to a 20-year low last month is spurring Southeast Asia's biggest economy to push forward with a plan to reduce pain from a growing dependence on imported crude oil.

Oil futures in NY fell 0.4 percent Monday, extending a record 11th day of declines, to end the session at $59.93 a barrel.

The crash deeply impacted oil producers, with Saudi Arabia's fiscal deficit rising to 16% of its GDP - meaning lesser money for infrastructure, defence, and its social projects such as free medicine for citizens and so on. Speculation is rife that other Organisation of the Petroleum Exporting Countries, or OPEC, may announce similar cuts. Domestic production reached 11.6 million barrels per day (bpd), up from just 9.6 million bpd a year earlier.

Trump (@realDonaldTrump) November 12, 2018Trump tweets, #oil dips: WTI has come off from $61.0 towards $60 on Trump's latest tweet: "Hopefully, Saudi Arabia and OPEC will not be cutting oil production". Prior to Monday's increase, crude futures had fallen for 10 straight trading sessions.

"If they don't get ahead of the game ... those [global oil] inventories will rise and the price will fall like a rock", he said. Individual countries are still vulnerable to oil price fluctuations but, for instance, the universe of corporate issuers is less concentrated in energy names than perceived by investors.

Oil rigs at work at dusk.

Thus, midstream companies such as Plains All American could be a safer bet on the USA oil boom.

OPEC and the International Energy Agency release their respective monthly reports on the outlook for oil supply and demand later this week.

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