BCN-11,12 Major oil producers to consider cuts after price slide

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BCN-11

WORLD-OIL-COMMODITIES-OPEC

Major oil producers to consider cuts after price slide

DUBAI, Nov 11, 2018 (BSS/AFP) – Major oil producers meet in Abu Dhabi on
Sunday to consider reverting to output cuts after a sharp slide in crude
prices revived fears of a 2014-style crash.

Oil prices shed a fifth of their value in just one month after surging to
a four-year high in early October, driven by a combination of factors centred
on higher supply and fears of sluggish demand.

Brent crude dropped below $70 a barrel on Friday for the first time since
April while the New York’s West Texas Intermediate (WTI) sank below $60 a
barrel, a nine-month low.

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.

The slide also comes during signs of a softer-than-expected impact from US
sanctions on Iran oil exports.

“Prices have been falling amid a continued rise in crude supplies from big
producers, such as Saudi Arabia, Russia and the US, more than compensating
for lost Iranian barrels,” Forex.com analyst Fawad Razaqzada told AFP.
“With the Iranian sanctions not being as severe as initially feared,
officials from the OPEC and non-OPEC producers may discuss at the weekend the
need to bring compliance back down towards the 100-percent level or risk
another 2014-style slide in prices,” he said.

Energy ministers of top producers Russia and Saudi Arabia will join other
OPEC and non-OPEC officials for the meeting of the Joint Ministerial
Monitoring Committee, which oversees production levels.

The world’s second and third crude producers — after they were overtaken
by the United States thanks to shale oil — Russia and Saudi Arabia are the
core of an alliance of producer nations that succeeded in solidifying oil
prices after the 2014 crash.

Through large production cuts starting at the beginning of 2017, they
managed to push up oil prices from below $30 a barrel to over $85 a barrel in
October, strongly improving their revenues.

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.

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BCN-12

WORLD-OIL-COMMODITIES-OPEC 2 LAST DUBAI

Saudi Arabia raised its production from around 9.9 million barrels per day
in May to around 10.7 million bpd in October, according to Energy Minister
Khalid al-Falih.

Kuwait, Iraq, Russia and the United Arab Emirates also boosted their
output.

Cailin Birch, analyst at the Economist Intelligence Unit, said a slowing
oil demand is beginning to appear in China, the world’s largest importer of
crude oil.

“The recent drop in oil prices reflects a combination of factors. For one,
signs of slowing oil demand are beginning to appear; the rate of GDP growth
in China is beginning to ease,” Birch told AFP.

The meeting, which will also be attended by the oil ministers of Kuwait,
Venezuela and host nation the UAE, is not due to make decisions but will most
likely send signals.

The JMMC, a technical committee, is expected to make important
recommendations on production cuts to a key ministerial meeting in Vienna
next month for the OPEC and non-OPEC producers.

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

“If they fail to signal any intention to reverse the latest increase in
production, oil prices threaten to slide further,” the bank said in a note.

BSS/AFP/HR/1010