Published: Fri, November 16, 2018
Money | By Wilma Wheeler

Oil Prices Mixed In Choppy Trade

Oil Prices Mixed In Choppy Trade

Though the price dropped later to $84.75, per barrel, following the decision of the International Monetary Fund (IMF) to lower its forecasts, among other issues, the rise in price of crude was not an issue to be forgotten soon.

Saudi Arabia is considering pushing through curbs on crude at next month's Opec meeting, on signs that supply is starting to outpace demand.

Brent crude futures, the global benchmark fell by 7.34 percent to $64.97, while US West Texas Intermediate (WTI) lost $2 in less than 30 minutes to sell at $55.12 on Tuesday evening.

OPEC - led by Saudi Arabia - along with Russian Federation have been burned by previous decisions to refuse production cuts.

Oil's slide accelerated on Tuesday (Nov 13), with United States futures suffering their steepest one-day loss in more than three years due to ongoing worries about weakening global demand and oversupply. In 2019, world oil demand growth is forecast to grow by 1.29 mb/d y-o-y, about 70 tb/d lower than last month's projection, with total world consumption to reach 100.08 mb/d.

In the meantime, crude oil prices appear to have found contention at fresh 2018 lows at $54.76 recorded last Tuesday, all amidst the largest sell-off since 2014.

The United States will lead the output growth.

The price of benchmark Brent crude oil slipped below $70 earlier this week for the first time in more than a month amid fears of a new oversupply driven by record USA production and milder than expected sanctions against crude producer Iran.

Inventories of oil in OECD countries rose by 12.1 million barrels in September to 2.875 billion barrels, the IEA said, adding that for the third quarter as a whole, stocks rose 58.1 million barrels, or at a rate of 630,000 bpd, the biggest increase since 2015.

This week, Trump said he hoped Saudi Arabia and the rest of OPEC would not cut production. Alternatively, Russia may propose not to increase output further, instead of a cut, the source said.

Opec is to gather in Vienna to assess the market.

"This will, in our view, cap any upside above $85 per barrel (for oil prices)", said Jon Andersson, head of commodities at Vontobel Asset Management. Output, however, rose by 127,000 bpd to 32.9 million bpd, Opec said. He continued that the ultimate aim is to compel Iran (currently the world's sixth largest exporter of crude oil) to permanently abandon its well-documented outlaw activities and behave as a normal country.

On the supply side, a surge in US production is contributing to rising stockpiles.

A new round of OPEC-led supply cuts in 2019 would further support US shale oil production, potentially repeating the cycle that played out in 2014.

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