Saudi Arabia's oil reversal is a win for American shale

Saudi energy minister lands in Baghdad to discuss reducing oil production

Iraqi Oil Minister Thamer Ghadhban receives Saudi Energy Minister Khalid al Falih in Baghdad Nov. 10 2018

Oil prices have staged a recovery, climbing above $70 a barrel after Saudi Arabia said the world's major crude producers agreed that supply needs to be significantly cut next year.

Khalid al-Falih, energy minister for the Saudis, justified his kingdom's inclination to cut back by pointing out at an Abu Dhabi oil summit on Monday, "If all things remain equal, and they nearly certainly will not as things will change - it is a dynamic market - then the technical analysis we saw yesterday ... tells us that there will need to be a reduction of supply from October levels approaching a million barrels".

"Saudi Arabia has stepped in front of the Oil market bears proactively announcing they will reduce exports by 500,000 barrels per day in December", says Stephen Innes Head of Trading Asia-Pacific at OANDA.

West Texas Intermediate, the USA benchmark oil price, had been declining for the hour before the tweet and briefly dipped lower before trading at $60.14 per barrel, down 5 cents for the day, at 1:49 NY.

"The technical analysis we reviewed yesterday shows that we need a reduction approaching one million bpd to balance the market", he told an energy conference in Abu Dhabi.

In the previous week ending November 2, WTI and Brent lost 6.6 percent and 6.2 percent, respectively, and WTI and Brent settled at 63.14 USA dollars and 72.83 dollars per barrel, respectively, at the end of the week.

UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn't allow the market to become oversupplied.

Shaheen Afridi called up to Pakistan Test squad, Shadab, Zaman miss out
Ross Taylor has been the standout batsman for the Black Caps so far as he scored a match-winning century in the first game. Going by the experience of the conditions, Pakistan holds the advantage in the last game before the Test series starts.

Commerzbank AG, Germany's second-largest lender, said last Friday oil producers must act to prevent a free fall of prices.

Opec and Russian Federation could revise their strategy, their oil ministers said at the conclusion of the Joint Ministerial Monitoring Committee meeting in Abu Dhabi on Sunday.

The news about Saudi Arabia cutting down on crude output, thus, ensured that on Monday, 12th of November, the price of Brent crude rose by 1%. 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.

Fears about oversupply sent USA oil prices plunging into a bear market last week. The U.S. standard, West Texas intermediate crude, was $60.19, down 21 percent in the same period.

Falih said they would then decide whether to adjust production and by how much.

These figures suggest the main issue facing the USA energy sector is the lack of infrastructure - which is seen as a temporary obstacle before the ongoing rise in United States production and exports dampens global energy prices, while boosting oil prices in North Dakota itself.

The move is aimed at stabilising crude prices which have declined rapidly in recent times, thereby affecting the finances of OPEC members and global oil companies.

Latest News