Published: Thu, December 13, 2018
Money | By Arnold Ball

Brent Oil Recovers Following OPEC Oil Output Cut Announcement

Brent Oil Recovers Following OPEC Oil Output Cut Announcement

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51 per barrel at 0028 GMT, unchanged from their last close.

"The more OPEC+ tries to support prices by withholding oil from the market, the more they give the USA shale sector an out from rationing supply growth themselves", it added.

"Volatility will be high in the near future, but going into 2019, we are constructive on oil prices", Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, told CNBC's Dan Murphy on Tuesday.

According to the OPEC's latest report, 15 countries represented in the organization produced approximately 33 million barrels of black gold (about a third of crude oil production worldwide) in October.

The move to cut 1.2 million barrels per day from the market was not easy, Suhail Mohamed Al Mazrouei, UAE minister of energy and industry and president of the OPEC conference, has revealed in a television interview with Bloomberg.

Oil producers were under heavy pressure to slash production following a sharp fall in oil prices over the past few months.

OPEC has agreed to cut by 800,000 bpd, led mainly by Saudi Arabia, while non-members will cut by 400,000 bpd, with most of that decrease shouldered by Russian Federation.

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President Donald Trump also stoked worries when he referred to himself as a "Tariff Man" in a tweet on Tuesday. The Journal reported that the amount of tariffs USA importers have paid since May has doubled.

Oil fell on Monday, in line with further declines in global stock markets, erasing the gains made last week when producer group OPEC and other key exporters agreed to cut their crude output from January.

The new agreement set the grounds for cutting overall oil production by 800,000 barrels per day by OPEC nations throughout the first six months of 2019.

Azerbaijan presented data on its daily oil production in November 2018 to the OPEC Joint Technical Committee as part of the Vienna Agreement, the country's Energy Ministry reported. Since October, 2018 Oil price have dropped by nearly 30%, and this decision is expected help oil producers.

"The surge in USA supply in recent months should be a reason for caution", Bank of America Merrill Lynch said in a note on Monday. The minister said the cuts will help restore balance to the world market in 2019.

According to the International Energy Agency (IEA), the demand for crude oil produced by OPEC countries at the world market is now at 31.3 million barrels.

Per day, total cut in the oil production is estimated to be more than 1 million barrels.

Although Qatar is OPEC's smallest Middle East oil producer, it's now the world's biggest liquefied natural gas (LNG) exporter.

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