Saudi minister: OPEC+ deal 'supports global economy'

3 Reasons Why Oil Is Soaring Today — And What's For The Commodity

3 Reasons Why Oil Is Soaring Today — And What's For The Commodity

Russia's Vladimir Putin and Saudi Arabia's Mohammed bin Salman may discuss oil supplies at the summit in Argentina. Attending countries would agree some form of production cut in the meeting. "Now the Saudis are seeking a very broad agreement where everyone accepts some cuts", said Olivier Jakob, managing director at consultant Petromatrix GmbH in Zug, Switzerland. Saudi Arabia is pumping as much as 11.2 million barrels a day, though it has said it supports a drop in output and has pledged to reduce monthly exports by 500,000 barrels a day in December.

OPEC, which pumps four-in-10 barrels produced worldwide, will convene in Vienna on December 6 to discuss output cuts after oil prices in November suffered the largest monthly drop since the global financial crisis in 2008. At the meeting, the cartel, along with non-OPEC member Russian Federation, is expected to announce cuts aimed at stabilizing prices and reining in production.

"Markets are expecting for the OPEC+ deal to be renewed, which should be healthy for consumers and producers and the global economy as a whole".

At the OPEC meeting next week, “oil producers could well decide to cut output by over 1 [million] barrels a day, with Russian Federation also starting to express concern about falling prices, ” said Michael Hewson, chief market strategist at CMC Markets UK, in a Friday note.

Prices, however, significantly pared much of their early Friday losses as speculation has grown over a potential production cut by major oil producers, ahead of the OPEC meeting. They've been exempt from the group's cuts agreement and are unlikely to welcome a decision to include them in any new cuts, Petromatrix's Jakob said.

Both main contracts have plunged by about a third since hitting four-year highs at the start of October, hit by a number of factors including easing demand, high production, softer-than-expected United States sanctions on Iran and a global growth slowdown. The volume reduction can range from 1.0 to 1.4 million barrels./day.

At 0846 GMT, January WTI crude oil futures are trading $53.38, up $2.45 or +4.81% and February Brent crude oil is at $62.08, up $2.62 or +4.44%.

"Markets think there will be some sort of a cut", said Mike Wittner, head of oil market research at Societe Generale SA.

France's President Emmanuel Macron, who has faced intense protests against growing gasoline prices in his country, also called for cheaper oil at the G-20 summit.

The oil reserves in the US increased by 3.6 million barrels in the week to 23 November to 450,49 million barrels, according to the worldwide energy Agency. However, WTI prices lost 20.9% in November.

That has left Brent was down about 12% so far this year, as surging oil production in the US, Russia and among key members of OPEC has helped to create a glut in global markets.

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