Oil extends gain as Opec crude production slips before meeting

Cornelia Mascio
Dicembre 3, 2019

Brent futures rose by 43 cents to $61.35 per barrel while the U.S. West Texas Intermediate (WTI) crude was up 44 cents at $56.40 per barrel.

A senior adviser to President Donald Trump said a US-China trade deal was still possible before the end of the year, adding that the first phase of the agreement was being put to paper, although the talks have dragged on for weeks.

Oil prices surged on Tuesday in the worldwide markets following speculations that the world's largest producer, Saudi Arabia is pressing for more supply cuts as members of the Organisation of Petroleum Exporting Countries and its allies (OPEC+) converge this week on Vienna, Austria.

"I have no deadline, no", Trump told reporters in London, where he was due to attend a meeting of North Atlantic Treaty Organisation leaders.

OPEC+ has signaled it'll stick with its existing production deal, but Iraq said on Sunday that the group may consider deepening output cuts.

OPEC oil output fell in November as Angolan production slipped due to maintenance and Saudi Arabia kept a lid on supply to support prices before the initial public offering of state-owned Saudi Aramco, a Reuters survey found.

The factors behind this view included a large increase in production from legacy non-OPEC projects and an as yet uncertain outlook for demand growth, it added.

Meanwhile, world's leading investment bank, Goldman Sachs noted on Monday that OPEC+ is keen on extending output cuts till June with the hope that the three-month window of extension would aid prices in the market. "China trade war continue to weigh on prices but US crude inventories are expected to have declined last week which may lend some support", Phil Flynn, analyst at Price Futures Group in Chicago, said in a note.

OPEC ministers meet in Vienna on Thursday and the broader OPEC+ group gathers on Friday.

United States crude inventories are expected to have declined last week, which may support prices, with analysts in a preliminary Reuters poll suggesting a contraction of 1.8 million barrels.

OPEC's de facto leader Saudi Arabia will agree to lower its quota to 10 million bpd from 10.3 million bpd and will press other producers, particularly Iraq, Nigeria and Russian Federation, to improve their compliance with previous commitments, JPMorgan analyst Christyan Malek wrote in the note.

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