Published: Sat, December 01, 2018
Money | By Ethel Goodwin

Crude Market: Oil dips below $50 on output doubts

Crude Market: Oil dips below $50 on output doubts

America and OPEC did boost their output to rein in the global oil prices and then the subsequent relaxation of sanctions for countries, especially like India to import oil from Iran resulted in a market surplus leading to the reduction in crude price.

November still marks the largest one-month drop for oil since the financial recession ten years ago, having lost about 22 percent so far.

A steady rise in crude supply from the United States, now the world's top producer, has pressured prices along with Saudi Arabia's insistence that it will not cut output on its own to stabilise the market. As Delia Morris, Houston-based commodity pricing analyst, told Rigzone earlier this week, global oil markets are anxiously awaiting the outcome of the December 6 Organization of the Petroleum Exporting Countries (OPEC) meeting and whether the cartel will agree to curb output.

Then came out a report by Reuters that Russian Federation has started to concede that it needs to join a new Saudi-led oil production cut, but is still bargaining with its key OPEC partner over how much, how fast, and for how long it would potentially reduce its oil output.

US crude fell 32 cents to $51.24.

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.

Moscow has so far resisted joining any new production cuts and Falih did not say whether he had heard of any change in Russia's position. While US crude futures were hovering at $50.29 a barrel, worldwide benchmark Brent crude ended at $58.76 a barrel on Wednesday.

The API said that US crude stocks rose by 3.5 million barrels, more than analysts forecast.

US energy firms this week added oil rigs for a third week in four and increased the rig count for the fifth month in a row, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday. He stated that the current Brent crude oil prices of about $60 per barrel were okay for his country.

Asked on Wednesday whether cuts could be deeper than 1.4 million bpd, Falih declined to answer.

A director with Tortoise, Nick Holmes, who manages a portfolio in energy that is over $16 billion, this report shows an increased build in relation to the market consensus on crude stockpiles in the US.

"We have seen huge increases in supply and the demand picture is in question". -China trade war a key focus. "However, we might see some movement on global trade issues at the G20 meeting which starts on November 30", said Michael McCarthy, chief strategist at CMC Markets and Stockbroking.

Anticipation of the meeting may also be driving prices higher, said Kilduff of Again Capital, adding that traders are wary of being short ahead of the meeting.

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