US Oil Production Surge Keeps Pressure on OPEC+ to Cut Supply

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US Oil Production Surge Keeps Pressure on OPEC+ to Cut Supply

An agreement to cut oil production by some 1.8 million barrels per day - struck in late 2016 by OPEC and other world producers led by Russian Federation - is paying dividends, Al-Falih tweeted.

Russian Federation and Saudi Arabia agreed to extend into 2019 their agreement to manage the oil market, known as OPEC+ at the weekend's G20 meeting in Argentina. "And whatever is the final figure, we agreed to monitor the market situation and react to it quickly".

With Saudi Arabia and Russian Federation pumping oil at record rates, United States output surges and energy forecasts are indicating a decreased demand in 2019 due to increased supply, which could make the global economy more sluggish.

Speaking to Bloomberg, Derek Brower, a director at consultant RS Energy Group said "This might be the critical breakthrough for OPEC and non-OPEC to cut".

Heading into the OPEC meeting, “it wouldn't be a surprise to see crude prices stabilize, or even recover, as speculation for a cut grows, particularly if the relevant officials continue to strike an optimistic tone, ” said Marios Hadjikyriacos, a market analyst with broker XM.

Putin said he had no concrete figures on the extent of the future output cuts. WTI was down 7 USA cents to settle at 51.56 dollars a barrel, while Brent dipped 0.27 dollar to close at 60.21 dollars a barrel. The advisory group's proposals aren't binding, and OPEC ministers often choose a different path.

Trading action was also held in check ahead of weekend meetings of the Group of 20 in Argentina, where oil talks are expected take place on the sidelines, ahead of an official meeting on December 6 between OPEC and its allies.

Despite US sanction over Iranian oil, the OPEC output remains plentiful and the oil price have plunged 30% since early October and US oil reserve has reached a record high. Oil trading has been volatile over the last week as traders took positions ahead of the OPEC gathering.

"It's a huge week not only for oil markets but capital markets in general", said Stephen Innes, head of Asia-Pacific trade at OANDA. "However, there's concern that the cuts will not be big enough and also that the message may be intentionally unclear, in order not to get President Trump upset".

"It's hard to predict where oil prices will go from here but they have been heavily oversold", he said.

For Prince Mohammed, the kingdom's day-to-day ruler, the dilemma between keeping the US president happy and having an oil price that balances the Saudi budget has been sharpened by the murder of journalist Jamal Khashoggi.

That growing belief saw oil prices trim early falls on Friday. Despite pressure from angry senators and other Washington power players, the Trump administration has maintained its support for the Saudi leader.

Expectation has been rife that the deal would be renewed as OPEC prepares to meet this week in Vienna.

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