Published: Tue, November 13, 2018
Money | By Wilma Wheeler

Abu Dhabi summit: Oil production cuts may be necessary

Abu Dhabi summit: Oil production cuts may be necessary

The oil producers could agree (though Russian Federation doesn't want to) to reduce the output to somewhere between the May and October figure (say a cut of up to 1 million) - cutting all the way to May level may attract the wrath of Donald Trump.

Due to a glut two years ago that saw crude oil prices plunge to under US$30 a barrel from US$100, the major oil producers started cutting down output.

U.S. crude prices fell for the 11th consecutive session, the most on record since the contract began trading, retreating from a rally early in the session as U.S. President Donald Trump said he hoped there would be no oil output reductions.

There's less than a month before oil producing countries meet to decide their output and the Organisation of the Petroleum Exporting Countries (Opec) has come under rebuke from Malaysia's prime minister.

Saudi Arabia, the world's top oil exporter, has been pumping 10.7m bpd since October, according to Falih.

They would, therefore, consider "options on new 2019 production adjustments, which may require new strategies to balance the market", they said in a statement at the end of the meeting.

Trump in recent weeks demanded the oil cartel increase production to drive down US gasoline prices.

However, market participants say the global energy market could see another period of excessive supply of crude oil as soon as next year - with oil bulls looking at Bakken anxiously.

The move is likely created to stop the slide in crude prices which had recently fallen over 20% from early October, leaving them in a technical bear market. "Oil prices should be much lower based on supply!"

Saudi Arabia, a key USA ally, had earlier pledged to bump up production to compensate for the impending blacklisting of Iranian crude.

Speaking in Abu Dhabi, he said that Saudi Arabia's announcement would now "probably firm the price".

"We were in the meeting in Jeddah, when we read the tweet", OPEC Secretary General Mohammad Barkindo said earlier this year.

OPEC members may be weighing oil production cuts again, anxious that a slowing global economy will undermine prices, but in the group's Middle East heartland producers are spending billions to add output capacity for the long term.

The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand. He said the committee were reviewing the market and would draw up a plan to deal with the prospect of higher supply in 2019.

Commerzbank, Germany's second-largest lender, said Friday oil producers must act to prevent a free fall of prices.

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