Oil Climbs on Signs OPEC Cut May Be Extended

                        

The Saudi Arabian Minister of Energy, Industry, and Mineral Resources H.E Khalid Al Falih says further crude oil production cuts are crucially necessary for the global energy market to rebalance. Crude oil prices gained on clear signs that Saudi Arabia plans to back an extension of OPEC’s deal to reduce global crude oil production. Light, sweet crude rose 2.6% to $56.55 a barrel on the New York Mercantile Exchange. Meanwhile, Brent International crude Benchmark rose 2.2% to a $62.72 a barrel. Many energy traders are anticipating that OPEC (Organization of Petroleum Exporting Countries) and other major producers will announce a decision to extend the production cut deal beyond March 2018 during their upcoming OPEC meeting in Vienna on November 30. Following last year’s meeting, OPEC agreed to cut its crude output in an effort to harness the supply glut and gradually increase crude prices, by also successfully bringing in Russia to join in the cuts deal efforts, which marked a historical milestone considering that Russia is major non-OPEC crude producer. Russia had shown an eagerness to prolong the crude output cuts.

The high level of speculative long positions in the energy market could possibly add some high pressure on OPEC to come out of its anticipated Vienna meeting with an agreed extension to the crude cuts deal. It is noteworthy to mention that anything separate from an extension of output cuts deal past March of 2018 would most likely send crude prices immediately falling. Concerns over increased US shale output returned this week, raising some enquiries on whether the surge in shale output will continue to oversupply the market as other producers pull back. According to U.S Energy Information Administration, US crude oil production rose last week to a record high of 9.6 million barrels, whereas crude stockpiles rose by 1.9 million barrels. This came along a day after the IEA amended or revised its global crude oil demand forecasts.

https://www.wsj.com/articles/oil-climbs-on-hopes-for-opec-cut-extension-1510917441