Oil producers pledge to respect output cuts

Oil producers pledge to respect output cuts

Oil producers pledge to respect output cuts

Oil prices fell yesterday as a meeting of the OPEC+ alliance yielded no discussion about deepening supply cuts but focused instead on bringing Nigerian and Iraqi output down to their agreed quotas.

Boosting the market's good mood, the US Energy Information Administration said on Wednesday that US crude oil stockpiles fell last week to the lowest in almost a year, as refineries raised output and imports fell. Both were heading for a third session of losses.

U.S. West Texas Intermediate and Brent crude oil futures are trading mixed on Friday, while posting an inside move.

The bullish factors this week were Saudi Arabia's appointment of a new oil minister, OPEC and its allies' pledge to continue to cut output by 1.2 million barrels per day, a bigger than expected draw down in US crude oil inventories and optimism over a potential breakthrough in the U.S. But Saudi Arabia's new energy minister said talks on that issue would be left until the next OPEC+ meeting in December.

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The two leaders agreed to resume working-level talks during another meeting on June 30 at the Korean border, but no date has been set.

"Everyone committed to compliance but we've heard that before". Non-Opec production growth is seen rising to 2.3 million bpd in 2020, up 400,000 from this year.

UAE Energy Minister Suheil al-Mazrouei said on Sunday that the group will do whatever necessary to stabilise the market, and that further production cuts could be considered. The week began with buyers setting a bullish tone amid speculation OPEC and its allies would extend or even increase their output cuts, however, prices turned south mid-week as reports began to swirl that President Trump was considering easing sanctions against Iran, a move that would lead to increased supply.

Also feeding the bearish sentiment, the International Energy Agency, which advises industrial economies on energy policy, said surging USA output would make balancing the market "daunting" in 2020. The Paris-based agency maintained its estimate for growth in global oil demand during 2019 at 1.1 million bpd and 1.3 million bpd for next year, assuming no further breakdown in US-China trade talks and citing an easing of tensions around Iran.

Thanks to Cactus II and EPIC, outbound shipments of crude oil from Corpus Christi surged to a record in the first week of September, RBN Energy said on Monday, noting that the data may be "suggesting that the expected surge in exports of Permian oil is finally occurring".

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