Prices Weaken after Trump Suggests Delaying Trade Deal

Andrew Cummings
December 3, 2019

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russian Federation, known as OPEC+, are expected to at least extend existing output cuts to June 2020 when they meet this week.

West Texas Intermediate for January delivery added 28 cents to $56.24 a barrel on the New York Mercantile Exchange as of 7:40 a.m.in London. The contract rose by 1.4 per cent on Monday.

Worldwide benchmark Brent crude was trading at $61.03 per barrel at 0628 GMT on Tuesday for a 0.25% gain after it closed Monday at $60.88 a barrel.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are discussing a plan to increase an existing supply cut of 1.2 million barrels per day (bpd) by a further 400,000 bpd and extend the pact until June, two sources familiar with the matter said.


Also, the Saudi government is on the verge of putting out a strategy into the market to woo investors before the initial public offering of its oil company, Saudi Aramco.

Traders should continue to look for heightened volatility ahead of the OPEC meeting on December 5-6.

The investment bank said it expects Brent to trade around $60 a barrel in 2020 in the absence of geopolitical shocks. "If the group extends the current plans without making deeper cuts, prices are likely to retreat to near $50 a barrel".

The global oil supply demand balance requires an extension of the current OPEC+ cuts given the large increase in output from non-OPEC projects and an uncertain demand growth outlook, the bank said.


The U.S. oil producer companies remained unperturbed due to the continuous increase in production with the hope to meet up with shortfalls as the global oil regulator is due to announce possible cuts in supply this week.

While OPEC may cut output, United States producers have been happy to meet any market shortfalls with record-setting output.

U.S. crude inventories probably shrank by 1.5 million barrels last week, according to a Bloomberg survey.

USA crude oil inventories likely declined by 1.8 million barrels last week, according to six analysts polled by Reuters.


Other reports by iNewsToday

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