Major oil producers said on Sunday that crude supply next year would outstrip demand and signalled they may agree to production cuts when OPEC meets next month in Vienna. "Oil prices should be much lower based on supply!" the President had said in a Twitter post on Monday.
However, at the global level, it will be a new blow to consumers, who will have to pay more for gasoline, and will increase transport expenses of the companies.
For consumers, the 20 percent oil price fall since early October was a relief. US crude oil exports averaged 2.4 million barrels per day, down by 80,000 barrels per day from the previous week.
Brent crude futures were up 70 cents at $70.88 a barrel by 11:05 a.m. EST (1605 GMT), following four sessions of losses.
"In the short term this is a positive for oil, but we must question the impact longer term unless it's the sign of more to come from OPEC", said Neil Wilson, chief market analyst at Markets.com. "I think those reports are going to be even weaker because they will have to adjust for the increase in USA production", Jakob said. The 15 members of the Organisation of Petroleum Exporting Countries, which include Saudi Arabia, alone pump over a third of global crude supply. According to Oilprice.com, U.S. shale production saw an increase of 400,000 bpd in the first week of November, pushing output up to 11.6 million barrels per day.
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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.
Saudi Arabia's Energy Minister Khalid al-Falih said Sunday that the OPEC and non-OPEC alliance would collectively decide whether reducing global output would be necessary over the coming weeks.
"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.
Root added that commodity prices that are influenced by cartels such as OPEC, which controls almost a third of global oil production, do not necessarily rise and fall with economic cycles.
Not even Saudi Arabia's promise to cut exports was enough to stem oil's slide.
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According to official statistics, Russia's oil production in October averaged 11.4 million barrels per day, approaching an all-time high.
Sixty-two per cent of GIQ Survey respondents agreed that the United States shale production levels will force Gulf Arab countries into stepping up their own investment in shale oil exploration.
"Saudi Arabia can not act alone though - realistically it needs to pull together OPEC allies, and critically Russian Federation, to curb production if it wants prices to hold".
"However, producers are concerned that the latest selling frenzy could see Brent oil reach $60 or below".
"A new strategy needs to be formed. whether it is a cut in production or something else, but it will not be an increase in production", he said.
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