Saudi's Falih says need for 1 million bpd cut in oil output

Devin Lawrence
November 14, 2018

Not even Saudi Arabia's promise to cut exports was enough to stem oil's slide. Trump said in a Twitter post on Monday.

Crude oil futures for December, which rose to $61.28 earlier in the session, settled lower by $0.26, or 0.4%, at $59.93 a barrel, the lowest settlement since February 2018.

They agreed that output increases by producers other than Iran would lead to a glut next year.

US crude oil imports averaged 7.5 million barrels per day in the week, up by 195,000 barrels per day from the previous week.

The caution of some other members of the group over whether respond swiftly to the recent price collapse arises partly from the unpredictability of Iranian supply amid USA sanctions. That's 500,000 barrels a day lower than its forecast just two months ago and about 1.4 million below current production.

Still, the president is likely aware that his statement could irritate Saudi leadership.

"Equities and oil were pretty much falling in lock-step", said Josh Graves, senior market strategist at RJO Futures in Chicago.

And the changes in posture by a Trump administration that had previously given Riyadh a pass on a range of worldwide issues could prove an irritant in a relationship that has been carefully cultivated by the president and his son-in-law, Jared Kushner.

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The bank added that it expected USA crude production which is already at a record 11.6 million barrels per day (bpd), to break through 12 million bpd in 2019, making the United States "energy independent". "[There is] stronger return to stability for Libya, and Nigeria [is] stabilising and as members of Opec we want them to supply and grow", said Mr Al Falih.

Shares in Apple fell "after it was reported that a supplier was asked to materially reduce shipment for iPhone parts", a Schwab Market Update said.

Despite the sanctions against Iran, the supply of oil is ample as output from the world's top three producers - Russia, the United States and Saudi Arabia - is rising. It's a concern shared by OPEC Secretary-General Mohammad Barkindo, who said Monday that the market balance is under threat from surplus supply and dwindling demand.

"The balances for 2019 do show, especially in the first half of the year, that there will be significant global oversupply", Petromatrix analyst Olivier Jakob said.

Global appetite for the group's crude will be about 31.5 million barrels a day next year, OPEC said.

Trump may also find a familiar ally in his effort to pressure the Saudis: Russian President Vladimir Putin. Representatives of the OPEC nations, Russia, and several other oil-market allies are meeting this weekend and could discuss such measures.

However, the Trump administration has been reluctant to further punishing the Saudi side, citing alliance concerns and the role of Saudi purchase of United States military equipment in promoting jobs.

The nearly unexpected October crash in global crude prices raised concerns from stakeholders who called on OPEC to act swiftly towards remedying the situation.

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