Oil prices climb on prospect of OPEC and Russian cuts

Oil prices climb on prospect of OPEC and Russian cuts

Presumably, prices at that level would be too low even for USA president Donald Trump, who has spent the better part of the year pressuring OPEC to produce more and lower prices from earlier highs of $80; this week the brash billionaire met with Russian president Vladimir Putin and discussed the issue, with the latter subsequently telling media that "where [the market] is now, where it was recently, anything around $70 suits us completely".

Oil futures fell about 1 percent on Monday amid global oversupply worries, but losses were muted as investors eyed potential sanctions on Iran from the European Union, a possible production cut from OPEC and slightly bullish storage drawdown in U.S. crude stocks. The market is recovering after concerns over global oversupply spurred the Organization of Petroleum Exporting Countries and its allies to consider reducing output. "We'll see if it is right after the next OPEC meeting on December 6".

A US decision to grant waivers to some of Iran's oil customers, who faced the prospect of a drop-off in supply from sanctions that came into force in early November, has also helped soothe concern about availability of crude. Trade tensions between the United States and China escalated over the weekend, adding to worries supply may overtake consumption.

OPEC, led by Saudi Arabia, is pushing for the group and its partners to reduce output by 1 million to 1.4 million barrels per day to prevent a build-up of unused fuel.

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Brent crude (LCOc1) settled up 3 cents at $66.79 a barrel, strengthening late in the session after earlier hitting a low of $65.27 a barrel. There is no need to take any action to halt the decline of oil prices that started a month ago, Novak said last week. The more-active January contract gained 73 cents to $57.41. The global benchmark crude traded at a $10.01 premium to WTI for the same month.

USA energy firms added two oil rigs in the week to November 16, bringing the total count to 888, the highest level since March 2015, a weekly report by energy services firm Baker Hughes said on Friday. United States crude production has been rising, hitting a record in the week ended November.

Meanwhile, traders are assessing how much output reduction will be agreed when OPEC meets in Vienna early next month. "Currently markets are very well supplied but we should not forget that spare capacity in Saudi Arabia is very thin, therefore cutting the production significantly today by key oil producers may have some negative implications for the markets and further tightening the markets", Birol argued.

The speculator group cut its combined futures and options positions on USA and Brent crude during the week ended November 13 to the lowest since June 27, 2017.

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