Brent crude jumps to $71.59/barrel as Saudi Arabia announces supply cut

Marco Green
November 14, 2018

Mr Yergin said: "It's the big three, it's Saudi Arabia, Russia and the USA, this is a different configuration in the oil market than the traditional OPEC-non-OPEC one and so the world is having to adjust". He was speaking in Abu Dhabi, where an oil market monitoring committee was held on Sunday, attended by top exporters Saudi Arabia and Russian Federation.

West Texas Intermediate crude also dropped to a nine-month low, below $60 a barrel. The fall marked the 11th consecutive daily decline, the most since the contract began trading, according to data from CME Group.

Brent futures for January settlement fell 6 cents to close at US$70.12 on the London-based ICE Futures Europe exchange. Brent (LCOc1) dropped $2.96, or 4.2 percent, to a low of $67.15 a barrel.

Commerzbank, Germany's second-largest lender, said on Friday that oil producers must act to prevent prices tumbling.

US crude futures (CLc1) lost $2.64, or 4.3 percent, to hit $57.30 a barrel, lowest since December 2017, as of 12:18 a.m. EST (1718 GMT).

Less than two months after Khalid al-Falih's assurances that Saudi Arabia will produce and export enough oil to keep prices steady, the Kingdom's Energy Minister has said that exports would be cut by as much as 500,000 bpd this month and next on a bid to prop up prices.

UAE Energy Minister Suhail al-Mazrouei, left, listens to Khalid Al-Falih, Saudi Energy and Oil Minister, in the opening ceremony of the Abu Dhabi International Exhibition & Conference, ADIPEC, in Abu Dhabi, United Arab Emirates, Monday, Nov.12, 2018.

Saudi Arabia's energy minister said earlier Monday that Opec and its allies should reverse about half the increase in oil output they made earlier this year.

Crude oil prices attempted to rebound on Monday, rising in the morning after Saudi Arabia signaled production cuts.

There are signs that renewed USA sanctions on Iranian oil exports may have a softer-than-expected impact.

While no decision to reduce supply was taken over the weekend, this month's report will add to the chorus of views within the group, pushing for new cuts. He noted that in 2015 when OPEC lifted its output by about 2 million barrels a day, just over 2% of global demand at the time, oil prices decreased by roughly a third, while oil stocks experienced a simultaneous plunge.

However, market participants say the global energy market could see another period of excessive supply of crude oil as soon as next year - with oil bulls looking at Bakken anxiously.

The 15 members of the Organisation of Petroleum Exporting Countries, which include Saudi Arabia, alone pump over a third of global crude supply.

The kingdom's energy minister, speaking after a meeting of Opec at the weekend, said the cartel believed that production would need to fall by almost 1m barrels per day (bpd) on October levels.

Other reports by Click Lancashire

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