OPEC deal could push oil to $80 per barrel
- Author: Zachary Reyes Dec 13, 2018,
Dec 13, 2018, 6:25
An Opec official told the waiting press corps, negotiations will continue Friday between the 15-member organisation and non-Opec oil-producing allies, which include Russian Federation and nine countries, to discuss how much each would contribute to supply cuts.
As of 15:50 GMT, Brent Crude was trading at $63.12 per barrel, up 5.09 percent.
Global benchmark Brent crude was trading at $59.53 at 12.50 p.m. EST (1750GMT), and American benchmark West Texas Intermediate (WTI) was at $51.18.
OPEC and allied oil-producing nations will cut oil output by a combined 1.2 million barrels per day from January, it was announced. According to the reports, the producers of oil will use the output of October as a baseline to cut production.
A week earlier, just before Alberta Premier Rachel Notley announced the province would curtail production from large companies to remove 325,000 barrels per day of oil from its over-taxed pipelines starting January 1, the WCS-WTI differential was twice as much, at US$29 per barrel. Prices have fallen by more than 30% since hitting a four-year high in October(read: Brent in Bear Market: 4 Country ETFs to be Cautious About). Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many US politicians to impose stiff sanctions on Riyadh.
They argue Riyadh's determination to force through a larger-than-expected cut was partly a warning shot in line with thinly veiled threats by Saudi officials to jolt the global economy, if the US moves to impose sanctions on the kingdom for Khashoggi's brazen killing.
- Even though the USA is expected to rebound back into net importer status next week, this marks the beginning of a new trend as American producers are edging closer to 12mbpd output.
Venezuela, Iran, and Libya were exempted from the production cutback, owing to Venezuela's already declining production, Iran's uncertain economic future under United States sanctions, and Libya's tumultuous security situation.
Data released Friday from Baker Hughes BHGE, +0.88% also implied a decline in future output, with the number of active us rigs drilling for oil down by 10 at 877 this week. "That is acceptable for most OPEC countries".
On Thursday, US government figures showed the country had become a net exporter of crude oil and refined products for the first time on record, underscoring how the surge in production has altered the supply equation in world markets.
The amount and the timetable of any cuts imposed by Russian Federation will also be a key sticking point.
The highly anticipated decision was delayed since Thursday pending the outcome of the dialogue between both groups on the ideal volume that would be adequate to help stabilise the market and strengthen crude oil price at the worldwide oil market. The Delaware Basin, the less drilled part of the field, holds more than twice the amount of crude as its sister, the Midland Basin, the U.S. Geological Service said Thursday.
Economic Affairs Minister Datuk Seri Azmin Ali said Malaysia's reduced output was in line with its commitment to worldwide cooperation to face economic challenges posed by the global oil market.
"Hopefully OPEC will be keeping oil flows as is, not restricted".
The proposed cut was in line with the 1 million to 1.3 million barrels per day expected by analysts.