OPEC+ Set to Debate Oil-Cut Cheating as Russia Seeks Rule Change

Daniel Fowler
December 3, 2019

The report citing two sources said the latest Opec analysis, drawn up by Opec's Economic Commission Board (ECB), showed a large oversupply and buildup in inventories in the first half of 2020, if no additional cuts were made.

Oil jumped above $61 a barrel on Monday, supported by hints that OPEC and its allies may agree to deepen output cuts at a meeting this week and as rising manufacturing activity in China suggested stronger demand.

On Sunday, the 1st of December 2019, the Iraqi oil minister, Thamir Ghadhban, said that the OPEC (Organization of Petroleum Exporting Countries), a 14-member pact of crude oil exporting nations alongside its allies were contemplating an option to stretch current output curb by about 400,000 barrels per day to a 1.6 million barrels per day, a comment which would likely to surge crude oil futures' prices on Monday (December 2nd) morning ahead of a meet of OPEC+ nations on December 5th in Vienna, Austria. U.S. West Texas Intermediate (WTI) crude was down 25 cents at $55.71.

On Friday, prices plunged partly because the hopes of a bullish outcome from the meeting had faded after reports that Russia's energy minister signaled that Russian Federation is likely to request a change to the current agreement among OPEC+ to curb output in an effort to boost crude oil prices.

The world's largest oil-producing countries are expected to maintain a tight rein on their oil output in an effort to keep global prices from tumbling below $65 a barrel. Growth into 2020, though, could range between 100,000 bpd and 1 million bpd.

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OPEC's ministers will meet in Vienna on Thursday and the wider OPEC+ group will gather on Friday.

In a sign of buying interest for oil, fund managers increased net long positions in U.S. crude futures and options in the week to November 26, the U.S. Commodities Futures Trading Commission said.

Rystad Energy finds that OPEC+ as a whole has cut oil production by 2.6 million bpd year-to-date, compared to October 2018 reference levels and the cut target of approximately 1.2 million bpd.

A senior adviser to President Donald Trump said a U.S. Some in the group are wary measures to support prices will encourage more USA production.

But it remains unclear if there is consensus within the group to achieve a deeper cut.

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