Oil prices rise by more than 1% after Saudi announcement

Oil prices rise by more than 1% after Saudi announcement

Oil prices rise by more than 1% after Saudi announcement

The worry: The Organization of the Petroleum Exporting Countries (Opec), which includes Saudi Arabia and Iraq and Iran, and other non-Opec oil producers such as Russian Federation met in Abu Dhabi on Sunday to discuss oil cuts.

An official from Kuwait, also an OPEC member, on Monday said that major oil exporters over the weekend had "discussed a proposal for some kind of cut in (crude) supply next year", although the official did not provide any detail.

USA energy firms last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm said on Friday.

Oil producing countries should cut output by one million barrels per day to re-balance the market, Saudi Arabia's energy minister said Monday, following a drop in crude prices.

The country is targeting production capacity of 5m bpd in 2019, with average exports expected to reach around 3.8m bpd.

The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand.

For consumers, the 20 per cent oil price fall since early October was a relief.

In his speech at the start of the meeting, Falih said the recent sharp drop in prices had "surprised us".

US West Texas Intermediate (WTI) crude futures were at $60.87 per barrel, up 68 cents, or 1.1 percent. While its meeting with other producers on Sunday yielded no change in supply policy, OPEC+ warned in a statement that it might need "new strategies", raising the prospect of a wider and coordinated cut in 2019.

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Since hitting four-year highs last month, crude prices have slumped on rising production, Chinese economic growth fears, and easing concerns about the impact of sanctions on Iran. The cut represents a reduction in global oil supply of about 0.5 percent.

"Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the USA, more than compensating for lost Iranian barrels", Forex.com analyst Fawad Razaqzada told AFP before the meeting.

Any formal decision on production cuts by Opec would likely come at its next meeting, in Vienna on 6 December.

Saudi Arabia has been pumping 10.7 million bpd since October, Falih said.

He said market sentiment had shifted from fears of shortages to worries about oversupply.

The UAE's Mazrouei said the goal of OPEC and non-OPEC cooperation was to strike a balance in the market.

Through large production cuts starting at the beginning of 2017, they managed to push up oil prices from below United States dollars 30 a barrel to over USD 85 a barrel in October, strongly improving their revenues.

"If they fail to signal any intention to reverse the latest increase in production, oil prices threaten to slide further", the bank said in a note.

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