Published: Tue, December 11, 2018
Money | By Hannah Jacobs

Azmin: Malaysia to reduce oil output by 15,000 barrels per day

Azmin: Malaysia to reduce oil output by 15,000 barrels per day

I'd still say that a deeper cut would be needed to really see oil rally back to $70.

Heavyweight Saudi Arabia has been pushing a cut of about 1 million barrels a day, but the oil cartel was not able to make a decision on Thursday.

A week earlier, just before Alberta Premier Rachel Notley announced the province would curtail production from large companies to remove 325,000 barrels per day of oil from its over-taxed pipelines starting January 1, the WCS-WTI differential was twice as much, at US$29 per barrel.

Oil had plunged by more than 30 per cent earlier this month from a four-year high in October, as concern over excess supply was fueled by sanctions waivers given for some buyers of Iranian oil and growing US crude inventories and production.

With potentially higher shale production in the US, combined with non-compliance of some OPEC members and new production elsewhere, a new crisis is brewing.

Oil prices between $55 to $65 per barrel are a "sweet spot for the USA producer and the US consumer", said Rob Thummel, portfolio manager at energy investment manager Tortoise Capital. Saudi Oil Minister Khalid al-Falih said he hoped the group could reach a deal by Friday.

"Although we don't think that the current pricing differentials between Canadian barrels and USA barrels will be permanent, we are obligated to our shareholders to protect our business and our balance sheet until Canadian prices improve", said Cardinal in a news release. He added: "The World does not want to see, or need, higher oil prices!"

Trump was claiming to cut Iranian oil exports to zero and his best buddy bin Salman was Trump's main chess piece to succeed in his game against Iran.

OPEC ministers came to Vienna recognizing the economic realities.

Also speaking at the start of the meeting between OPEC and partner countries, Russian Energy Minister Alexander Novak said he was "confident that our resolve to achieve results is as strong as ever".

Crude surged as much as 5.4% in London, raising the risk that the deal could anger U.S. President Donald Trump, who had urged the group to keep the taps open and prices low.

"We'll cut 1.2 million bpd total", Iraq's Oil Minister Thamer Abbas al-Ghadhban told reporters after the meeting.

The move comes amid the second round of United States sanctions against Tehran that came into effect on November 5 following Washington's withdrawal from the Iran nuclear deal in May. "The level of oil supplies from Russian Federation, where oil companies are launching new fields after a two-year freeze, and Iran, where real export volumes are hard to assess, will, therefore, have a major impact on prices".

Earlier it was reported that the monitoring Committee of the OPEC have reached consensus on the reduction of oil production.

On the demand side, the trade dispute between US and China threatens global economic growth and could lead to lower demand in 2019.

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