Peter Uzoho with agency reports
United States crude prices turned negative yesterday as President Donald Trump said he hoped there would be no oil output reductions, after Saudi Arabia said the Organisation of Petroleum Exporting Countries (OPEC) was considering cutting supply next year, citing softening demand.
US benchmark West Texas Intermediate crude fell 18 cents a barrel to trade at $60.01 a barrel yesterday.
Following four sessions of losses, Brent crude futures crude further dropped to $69 per barrel barrel, paring gains after trading as high as $71.88.
Oil prices had strengthened earlier in the session, after Saudi Arabia said the Organization of the Petroleum Exporting Countries and its partners believed demand was softening enough to warrant an output cut of 1 million barrels per day next year.
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.
Saudi Arabia, the world’s largest oil exporter, said on Sunday it would cut its shipments by half a million bpd in December due to seasonal lower demand.
The market had anticipated that exports from OPEC member Iran would fall precipitously following the institution of US sanctions in November.
However, the US has granted waivers to certain major importers of Iranian crude, diminishing the expected cuts.
OPEC and the International Energy Agency release their respective monthly reports on the outlook for oil supply and demand later this week. ]
Oil prices have fallen around 20 percent in the last month, hit by an increase in global supply and the threat of a slowdown in demand, especially from customers whose currencies have weakened against the dollar and eroded their purchasing power.
Output from the world’s top oil producers Russia, the United States and Saudi Arabia has risen by 1.05 million bpd in the last three months, based on official output figures.
This has left OPEC scrambling to adjust its own output, which, at around 33.3 million bpd, accounts for roughly a third of global supply.
An official from group member Kuwait said on Monday major oil exporters had over the weekend “discussed a proposal for some kind of cut in (crude) supply next year”, although the official did not provide any detail.
One of OPEC’s biggest problems is the surge in US output.