Oil rises as Saudi Arabia pushes for further supply cuts

Cornelia Mascio
Dicembre 3, 2019

The price of Benchmark Brent oil - LCOc1 - rose more than 2 per cent to almost $62 per barrel today on the news about the possibility of deeper cuts.

Oil prices were slightly higher on rising expectations of deeper production cuts as OPEC and its allies are meeting this week, despite skepticism among some analysts about the agreement limited gains. US West Texas Intermediate crude CLc1 rose 44 cents to $ 56.40 per barrel.

Saudi Arabia wants the Organisation of Petroleum Exporting Countries (Opec) and other oil producing nations to deepen production cuts under a deal that would be in place till June 2020 to give a big boost to oil market ahead of the listing of Saudi Aramco, reports citing sources close to the development said.

OPEC countries should administer deep cuts at their meeting in Vienna this week to avoid a plunge in oil prices, according to a research consultancy.

Iraqi's oil minister said on Sunday that OPEC and its allies will consider deepening their existing oil output cuts by about 400,000 barrels per day (bpd) to 1.6 million bpd.

Brent crude, the global benchmark, rose $1.13 to $61.62 a barrel by 1426 GMT.

Goldman Sachs said on Monday that OPEC+ will likely extend output curbs through June, but expects the "uneventful" three-month extension to provide little support to prices.

The partners will look at the outlook for the upcoming year, review reports and research related to the most important challenges faced in terms of oil surplus and increased United States shale production, the minister said.

The investment bank said it expects Brent trading around $ 60 per barrel in 2020, "new growth is present or geopolitical shocks".

Concerns about the inability of the United States and China, two of the world's largest oil user, to reach a preliminary agreement to settle a trade dispute their 17-month also weighed on oil prices, along with discouraging U.S. economic data.

While Opec may cut output, USA producers have been only too happy to meet any market shortfalls, with production setting successive records. Their current deal to cut supply by 1.2 million bpd started in January and expires at the end of March 2020.

In a sign of buying interest for oil, fund managers increased net long positions in US crude futures and options in the week to November 26, the US Commodities Futures Trading Commission said.

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