Crude oil prices recover after plunge buoyed by speculation of cuts

Andrew Cummings
November 29, 2018

Now, Saudi Arabia and allies have proposed a 1.0-1.4-mln-bpd cut in output.

Meanwhile, in the week ending November 23, the number of active drilling rigs in the United States decreased by three to 1,079, and the all lost are oil rigs.

Brent crude futures fell 27 cents to settle at $60.21 a barrel.

Analysts said continuous off-loading of holdings by participants in line with a weakening trend in global crude mainly weighed on crude prices at futures trade here. "We are definitely in a downtrend".

USA stock markets declined after President Donald Trump's threat to move ahead with additional tariffs on Chinese goods dampened hopes of resolving the trade fight at the upcoming G20 Summit.

"In this trading environment where all the moves that we see are exacerbated, the idea that the oil market has found a bottom doesn't seem to be taking hold yet", said Gene McGillian, senior analyst and broker at Tradition Energy in Stamford, Connecticut.

Saudi Arabia agreed to raise supply steeply in June, in response to calls from consumers, including the United States and India, to help cool oil prices and address a supply shortage after Washington imposed sanctions on Iran.

West Texas Intermediate crude for January settled down 7 cents to $51.56 a barrel on the New York Mercantile Exchange.

The global macro outlook should remain benign both in 2019 and 2020 as the US economy cools due to fading policy stimulus and any pick-up in Chinese growth remains hinged to the outcome of US-China trade dialogue. Thanks to a 19 per cent correction in oil prices in Q4 of 2018, we revise our 2019 Brent price (average price) lower by $10/bbl to $73/bbl and initiate our 2020 Brent forecast at an average of $64/bbl. We believe they are likely to discuss further extension of the existing accord at the next Annual Opec conference, given their commitment to, and high compliance with, the December 2016 accord and the continued rise in oil inventories lately.

The American Petroleum Institute will release figures on inventories Tuesday afternoon, while the Energy Information Agency will issue its weekly report on Wednesday after 10:30 a.m. EST.

OPEC meets in Vienna on December 6 to discuss output policy together with some non-OPEC producers, including Russian Federation. It also suggested it could agree with other oil producers to cut production by at least 1 million barrels.

"OPEC will probably manage to stabilize the oil market by choosing the right language", Benigni told CNBC's Sri Jegarajah. Brokerage PVM Oil Associates Ltd. cited the political tensions as another supporting factor for crude prices Monday Oil is unlikely to return to above $100 a barrel, and current prices are making it hard for major producers such as Angola, according to the country's president. All comments are subject to editorial review.

To contact the reporters on this story: Jessica Summers in NY at; Alex Nussbaum in NY at Off-topic, inappropriate or insulting comments will be removed.

Other reports by iNewsToday