Oil Prices Fall Again as US Crude Inventories Rise

Oil has remained in an oversold territory this month and seesawed near the US$50 threshold this week- a key budgetary marker for shale drillers

Oil has remained in an oversold territory this month and seesawed near the US$50 threshold this week- a key budgetary marker for shale drillers

The market kept a close eye on what signs of the global oil policy will come out from the gathering of world' s major oil producers at the G20 Summit, scheduled for November 30 to December 1, especially among heads of states of Saudi Arabia, Russia and the United States.

Russian President Vladimir Putin, whose country is the world's second-biggest oil producer, said on November 28 he was in touch with OPEC and ready to continue cooperation on supply if needed, but he was satisfied with an oil price of $60. Riyadh was hoping that it could piece together a plan to announce an output cut at the Organisation of Petroleum Exporting Countries (Opec) summit next week, but the Russian response hasn't been positive.

John Hancock Financial Services' Adam Wise, a strategist who takes care of a $9 billion oil and gas portfolio, stated that everyone was now looking towards the OPEC meeting next week to get a sense of which direction oil prices were going to take.

Thanks to a flexible currency and a much lower fiscal break-even price than the Saudis, Putin said this week that oil at $60/bbl was "absolutely fine" for his country.

The degree of the fall in global crude was not factored in by the governments but clearly, US President Donald Trump had signalled to Saudi Arabia that he was not happy with the way the prices were moving northward.

Falih was in Abuja to meet his Nigerian counterpart Emmanuel Ibe Kachikwu.

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Oil prices achieved one per cent gain yesterday clawing back some ground from losses in the previous session, but an increase in USA crude inventories and uncertainty in the run to an Organisation of Petroleum Exporting Countries (OPEC) meeting next week kept markets under pressure. "Everybody is longing (to) reach a decision that brings stability back to the market".

He added that Saudi Arabia could not act alone and stressed that clarity and collective decisions were needed to stabilize the market. "The key question is how quickly and by how much", a source familiar with the discussions between the Russian energy ministry and local oil companies told Reuters on Thursday.

The negative economic outlook helped to push oil below $60 a barrel this week from as high as $85 in October, prompting some oil producing states to suggest significant production cuts.

"OPEC needs to cut if it wants the market to be a little less oversupplied in the first half of 2019", said Petromatrix analyst Olivier Jakob. To this end, the group will be contemplating cutting oil output by 1 million barrels of oil per day.

"Iraq will probably say the right things regarding the OPEC meeting, about constraining or reducing output or even just "expressing support" for new output cuts", said Michael Barry, director of research at consultant FGE in London.

But the USA also offered generous waivers to allies who imported Iranian crude and might have struggled to find other supplies quickly when United States sanctions kicked in on November 4.

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