Oil slips after Trump complains about Opec’s plan to cut supply

14 November, 2018, 06:34 | Author: Mary Valdez
  • Saudi to cut oil exports by 500,000 barrels per day in December

Trump said on Twitter.

Khalid al-Falih's comments follow a meeting in Abu Dhabi at the weekend, where the OPEC group and its allies had already started laying the groundwork to cut supply in 2019, reversing an nearly year-long expansion. Oman, one of the smaller members of the OPEC, chipped in, stating that it would support a motion to cut oil supplies by 1 million barrels per day.

Oil futures in NY fell 0.4 percent Monday, extending a record 11th day of declines, to end the session at $59.93 a barrel. We also have 82 per cent of our exports made up of manufactured goods, so how can you say we're dependent upon oil revenue?

The profitability of US oil producers over the next few years will depend in large part on what OPEC and its allies do.

According to official figures, oil production in Bakken alone rose to the record level of 1.3 mln bpd last month, bottlenecking the majority of rail and pipeline routes.

But the producer nations eased the output cuts in June after signs of a tight market and higher prices, allowing hundreds of thousands of extra barrels into the market.

And the changes in posture by a Trump administration that had previously given Riyadh a pass on a range of global issues could prove an irritant in a relationship that has been carefully cultivated by the president and his son-in-law, Jared Kushner.

U.S. production of shale oil, which has added five mmbbl of oil to USA output over the last decade to move America onto a similar level as Saudi Arabia at around 11mn bpd, has also put downward pressure on oil prices. A drop off in crude oil prices in the recent period has weighed on oil and gas companies.

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"We need a consensus", he said, indicating that non-OPEC Russia would need to approve any decision. "We need not overreact" to falling prices, Mazrouei said, adding that crude was a dynamic market. "We in OPEC always pride ourselves as friends of the United States".

Saudi Energy Minister Khalid al-Falih said on Monday that oil cartel Opec agreed there was a need to cut oil supply in 2019 by about 1-million barrels a day from October levels to prevent oversupply.

The more Russia, Saudi Arabia, and their allies drive up prices now, the more profitable it will be for US producers to boost production.

"We are going to do everything we can to keep inventories and supply-demand fundamentals within a reasonably narrow band around balance, and we believe markets will calm down."
While global spending on new and existing oil and gas projects will rise 5 percent this year to $480 billion - almost 40 percent less than in 2014 - investment won't reach the $600 billion the industry needs annually through the next decade to meet future demand, according to consultant Wood Mackenzie Ltd.

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.

USA crude futures CLc1 settled down $4.24 a barrel, or 7.1 percent, to $55.69 a barrel.

Russian Federation and Saudi Arabia have reportedly started discussions over the potential output cuts in 2019. Oil was pulled 2.5% lower after the close amid a slide in equities, with President Donald Trump adding pressure with a tweet criticising the Saudi plan.

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