Major oil producers foresee oversupply, edge closer to production cuts

Saudi to cut oil exports by 500,000 barrels per day in December

A majority of OPEC and allied oil exporters support a cut in the global supply of crude, Oman Oil Minister Mohammed bin Hamad al-Rumhi was cited by Reuters as saying.

But he said the option of reducing production is possible, only if the market needs it.

"OPEC+ nations sent a clear signal they are concerned rising supply and weaker demand may keep pushing oil prices down", said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University in NY.

Saudi Energy Minister Khalid al-Falih said OPEC and its allies agree that technical analysis shows a need to cut oil supply next year by around 1 million bpd from October levels.

RBC Capital Markets says the likelihood of an official production cut at OPEC's December 6 meeting has increased.

These figures suggest the main issue facing the U.S. energy sector is the lack of infrastructure - which is seen as a temporary obstacle before the ongoing rise in United States production and exports dampens global energy prices, while boosting oil prices in North Dakota itself.

West Texas Intermediate, the US marker, climbed 0.9 percent to $60.75, paring its losses after falling into a bear market last week.

OPEC and the International Energy Agency release their respective monthly reports on the outlook for oil supply and demand later this week.

Separately, Khalid al-Falih, energy minister of the world's top supplier Saudi Arabia, said the kingdom would cut production by 500,000 barrels per day, AFP reported.

Global benchmark Brent crude oil futures were at $71.11 per barrel at 0051 GMT, up 93 cents, or 1.3 percent from their last close.

The crash deeply impacted oil producers, with Saudi Arabia's fiscal deficit rising to 16% of its GDP - meaning lesser money for infrastructure, defence, and its social projects such as free medicine for citizens and so on.

Oil prices, which rose above $85 a barrel in October, fell to less than $70 a barrel last week amid a supply glut.

Meeting to examine how to curb a sharp slide in oil prices, the producers said they "reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements". Those lower prices likely quieted Trump, but production cuts could again boost prices at the pump.

"We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability", he said. Trump said in a Twitter post on Monday.

Trump risks testing Saudi patience - or even provoking the kingdom's ire - at a particularly vulnerable moment, with the USA decision to reimpose sanctions on Iran threatening to increase prices. It's a concern shared by Opec secretary-general Mohammad Barkindo, who said on Monday that the market balance is under threat from surplus supply and dwindling demand.



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