US oil prices rebound after tumbling to lowest since June 2017 on economy fears

Oil prices were mixed in thin trading on Wednesday as the US benchmark rebounded from steep losses in the previous session, even though concern over the health of the global economy continued to overshadow the market in the longer term.

US West Texas Intermediate (WTI) crude futures, were up 29 cents, or 0.68 percent, at $42.82 per barrel, at 0355 GMT, having at one point risen as high as 2 percent from the last close. They had slumped 6.7 percent in the previous session to $42.53 a barrel - the lowest since June 2017.

Meanwhile Brent crude oil futures were down 11 cents or 0.22 percent at $50.36 a barrel, having skidded 6.2 percent in the previous session to $50.47 a barrel, the weakest since August 2017.

"$50 is a psychological support level (for Brent)," said Margaret Yang, market analyst for CMC Markets in Singapore.

"But market confidence needs to be restored for oil price...that include an equity market rebound and/or a bigger production cut from major oil exporters," Yang said, referring to an OPEC-led agreement to lower output from next month.

Broader financial markets have been under pressure on worries about a global economic slowdown amid higher U.S. interest rates and the U.S.-China trade dispute.

"U.S. equity futures are trading a bit firmer this morning triggering some little buying interest in the oil markets," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

But Innes added macroeconomics fears will continue unless the Organization of the Petroleum Exporting Countries (OPEC) "reassures markets the viability of their supply cuts and even impose deeper ones as some members have suggested". OPEC and allies led by Russia agreed this month to cut oil production by 1.2 million barrels per day from January.

Russian Energy Minister Alexander Novak said on Tuesday that oil prices would become more stable in the first half of 2019, supported by OPEC and non-OPEC countries' joint efforts to cut output.

Elsewhere, U.S. political turmoil triggered by the partial shutdown of the federal government is also adding to market concerns. President Donald Trump said on Tuesday that shutdown could last until his demand for U.S.-Mexico border wall money is met.

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Source: Moneycontrol

Oil prices tumble to lowest in more than a year as equities sell off

Oil prices fell about 5 percent on Thursday, hitting their lowest level in more than a year on worries about oversupply and the outlook for energy demand as a US interest rate rise knocked stock markets.

Brent crude futures fell $2.89, or 5.05 percent, to settle at $54.35 a barrel. US West Texas Intermediate (WTI) crude futures fell $2.29, or 4.75 percent, to settle at $45.88 a barrel.

Brent hit a session low of $54.28 a barrel, its lowest price since mid-September 2017, while WTI sank to $45.67, its lowest price since late August 2017.

Global stock markets dropped after the US Federal Reserve raised rates on Wednesday and maintained most of its guidance for additional hikes over the next two years, dashing investor hopes for a more dovish policy outlook.

US stock markets continued their decline on Thursday, dragging oil prices lower.

"Any additional weakening in risk appetite as underscored by a further drop in the equities could easily keep the speculative entities in WTI engaged in exiting remaining long holdings," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Both major oil futures contracts have fallen more than 35 percent from multi-year highs reached at the beginning of October.

Fatih Birol, head of the International Energy Agency, said on Thursday he does not expect a sharp increase in oil prices in the short term, unless there are geopolitical problems.

The Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices.

But the cuts will not happen until next month, and production has been at or near record highs in the United States, Russia and Saudi Arabia.

"The market remains sceptical of the ability of OPEC and Russian oil producers to rein in runaway output," said John Kilduff, a partner at Again Capital Management in New York. "This has become a 'show-me' market - assertions or commitments to cut are not enough right now."

OPEC plans to release a table detailing voluntary output cut quotas for its members and allies such as Russia in an effort to shore up prices, OPEC Secretary-General Mohammad Barkindo said in a letter seen by Reuters on Thursday.

Saudi Energy Minister Khalid al-Falih said he expected global oil stocks to fall by the end of the first quarter, but added that the market remained vulnerable to political and economic factors as well as speculation.

US crude inventories at Cushing, Oklahoma, the delivery point for US crude futures, rose by 1.85 million barrels in the week through Dec. 18, traders said, citing data from market intelligence firm Genscape.

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Saudi Arabia's finance minister said on Wednesday he was unconcerned with current oil prices impacting spending plans in 2019, and the government still aims to close its budget deficit by 2023 though the target is not set in stone.

Mohammed al-Jadaan told Reuters cash settlements from an anti-corruption campaign, which generated 50 billion Saudi riyals ($13.3 billion) in 2018, would net "not significantly less" in 2019.

The authorities have said they expect to confiscate more than $100 billion overall from a purge of princes, ministers and business tycoons ordered by Crown Prince Mohammed bin Salman in November 2017.

"We have a figure for the budget, but I can't tell you what it is. It's what we received from the attorney general as most likely to be coming our way," Jadaan said in an interview at Riyadh's Ritz-Carlton Hotel, where suspects in the corruption sweep were held for up to three months.

For three years - ever since Riyadh ran an eye-popping deficit of 367 billion riyals ($98 billion) in 2015, threatening its financial stability - fiscal policy focused to a large extent on reassuring markets by cutting the deficit.

Under an ambitious reform plan aimed at ending dependence on crude, the world's top oil exporter is seeking a balanced budget by 2023.

The government unveiled a 1.11 trillion Saudi riyal ($295 billion) budget on Tuesday, the kingdom's largest, with a seven percent increase in state spending to spur economic growth and a projected deficit of 4.2 percent of GDP.

"We are still targeting 2023, but what I'm saying is we need to realize that it is not set in stone," Jadaan said. "What's the point of having a balanced budget on 23 specifically? It could be 22, it could be 24. We want to be disciplined, we want to be efficient and pro-growth."

He said the ministry plans to borrow more locally than internationally, and would issue bonds mainly in US dollars but is considering venturing into other currencies including euro and yen.

Asked about the impact of lower oil prices on spending, Jadaan said: "Until today we are comfortable" and "even in the worst case scenario we are still relatively comfortable" given the kingdom's significant reserves and low debt to GDP ratio.

Saudi Arabia does not disclose the oil price assumptions on which its planning is based, but economists have estimated the 2019 budget implied Brent at $70-71 per barrel with oil production at 10.2 million barrels per day.

Oil stabilised on Wednesday after one of its biggest falls in years, but remained under pressure from oversupply and concern a slowing global economy would depress demand.

CORRUPTION SETTLEMENTS

Jadaan said seized assets were being managed and valued by a ministry-owned company, Istidama, run by a committee chaired by the commerce minister and with no connection to the sovereign wealth body, the Public Investment Fund.

"Some of them are liquid assets, so they liquidate them when the market is right. Some of them are more sticky assets in real estate and other private investments that they will then consider what are they going to do with," he said.

Construction giant Saudi Binladin Group (SBG), in which the government took a roughly one-third stake under the campaign, will soon have a "normal board" with family members and representatives of government ownership, according to Jadaan.

A five-member committee charged with restructuring the company's governance "is about now to conclude," most likely in 2019, he said. "It's a transition. That committee is just a temporary supervisory committee until the governance is sorted out."

Asked about the possibility of listing SBG on the stock market, he said: "A company with this kind of business you can't list for some time. It will need some time to go through restructuring, make it more business ready."

Reuters reported in September that the family-run company had ended up on a collision course with the government after chairman Bakr Binladin and his shareholder brothers resisted earlier pressure to list.

Other businessmen rounded up in the corruption sweep have ceded shares in publicly-listed companies among other settlements.

Among those detained was billionaire investor Prince Alwaleed bin Talal, who said in March he had reached an agreement with the government for his release, without disclosing details of the "confirmed understanding".

Asked about the government's seizure of shares in publicly-traded companies under corruption settlements, Jadaan said: "If it is not on Tadawul (stock exchange), we don't own it."

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Source: Moneycontrol

Oil prices resume drop, shed most of last session's gains

Oil prices fell on Thursday to erase most of their gains from the day before, resuming declines seen earlier in the week amid worries about oversupply and the outlook for the global economy.

The front-month US crude contract had dropped more than $1, or 2.24 percent, to $47.10 per barrel by 0423 GMT, offseting gains of 96 cents chalked up on Wednesday.

International benchmark Brent crude futures were down over $1, or 1.82 percent, at $56.20 per barrel, after climbing almost 2 percent the session before.

"Wednesday's recovery was short-covering. Investors quickly moved their attention to deteriorating fundamentals in the oil markets including more signs of slowing economic growth next year, record production and the lack of confidence with OPEC's pledge to curb production," said Xi Jiarui, chief oil analyst at consultancy JLC.

The Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices.

Oil prices are down more than 30 percent from peaks seen in October.

But the cuts will not happen until next month and production has been at or near record highs in the United States, Russia and Saudi Arabia.

Saudi Arabia's energy minister, Khalid al-Falih, said he expected global oil stocks to fall by the end of the first quarter, but added that the market remained vulnerable to political and economic factors as well as speculation.

Technical analysis showed US oil may retest support at $45.94 per barrel, a break below which could cause a loss to $44.43, Reuters market analyst Wang Tao wrote on Thursday.

SQUARING UP

Volatility in crude prices this week has driven investors to shut their positions and is draining liquidity from the market, Xi said.

Total market open interest in US crude contracts had fallen to 2.063 million contracts as of Thursday, up from a record of 2.71 million in May.

"It has been a tumultuous week in oil markets and traders may opt to shut it down after the last big risk event of the year with year-end position-squaring likely to kick-in today," said Stephen Innes, head of trading for Asia-Pacific at OANDA.

Innes was referring to the US Federal Reserve's last policy meeting of 2018, at which it suggested the US economy no longer needed the central bank's support either through lower-than-normal interest rates or by maintaining a massive balance sheet.

But US inventory data offered some support to WTI prices.

US crude inventories fell by 497,000 barrels in the week to Dec. 14, the US Energy Information Administration said on Wednesday, smaller than the decrease of 2.4 million barrels analysts had expected. The decline was the third consecutive decrease.

Distillate stockpiles, which include diesel and heating oil, fell by 4.2 million barrels, versus expectations of a 573,000-barrel increase, the EIA said.

Distillate demand rose to the highest since January 2003, which bolstered buying, particularly in heating oil futures, the market's proxy for diesel.

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Source: Moneycontrol

Global Markets: Asia braces for Fed as plunge in oil boosts bonds

Asian share markets played second fiddle to bonds on Wednesday as a spectacular fall in the price of oil fanned speculation the US Federal Reserve might be done with tightening after its policy meeting later in the day.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent in hesitant early trade. Japan's Nikkei eased 0.1 percent, while E-Mini futures for the S&P 500 inched up 0.17 percent.

Oil stole the show as a glut of supply saw US crude sink 8 percent overnight, while Brent shed almost 6 percent. US crude was last changing hands at $46.30 a barrel having hit its lowest since August 2017.

Brent's 35 percent plunge since October is sending a disinflationary pulse through the world at a time when trade and economic activity are already cooling.

That has only added to pressure on the Fed to abandon its commitment to yet more hikes.

US President Donald Trump on Tuesday warned the central bank not to "make yet another mistake", while the Wall Street Journal wrote an editorial calling for a pause.

So far, the futures market is sticking with a two-in-three chance of a rate increase on Wednesday.

"Despite recent market volatility we think that it is still more likely than not that the Fed will raise rates," said ANZ senior economist Tom Kenny.

"But we lean slightly towards the Fed removing the reference to the need for "further gradual increases"."

He also expects the median Fed forecast, or dot plots, to drop to two rate rises next year, from the three projected back in September. The market is well ahead of that and pricing in less than one rise in 2019.

Talk of a dovish turn helped Wall Street steady and the Dow ended Tuesday up 0.35 percent. The S&P 500 edged up 0.01 percent and the Nasdaq 0.45 percent.

BOND BONANZA

Stocks were left in the dust by bonds as 10-year Treasury yields hit their lowest since August at 2.8190 percent, near a major chart level at 2.80 percent.

Yields on two-year US notes fell 4 basis points to a three-month trough of 2.656 percent, a massive turnaround from November's 2.977 percent peak.

Japanese 10-year bond futures likewise started Wednesday at their highest since August 2016.

Reasons for the rally were easy to find. The latest survey of fund managers globally from BofA Merrill Lynch showed the third biggest decline in inflation expectations on record, while just over half expected the world economy to slow next year.

Investors rushed into bonds, with the largest ever one-month rotation into fixed-income assets, while cutting equities.

"Investors are close to extreme bearishness," said Michael Hartnett, chief investment strategist at BofAML. "All eyes are on the Fed, and a dovish message could equal a bear market bounce."

The steep drop in Treasury yields undermined one of the US dollar's major props and pulled its index back to 97.000, from a recent 97.711 top.

It fell to 112.46 yen, from a 113.70 high last week, while the euro nudged up to $1.1374  from a $1.1266 low.

In commodity markets, gold held near its recent five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold stood at $1,248.85 per ounce.

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Source: Moneycontrol

US oil prices drop 1% on oversupply fears

US oil prices fell 1 percent on Tuesday after slipping below $50 a barrel in the previous session, with reports of a big climb in US inventories and forecasts of record shale output stoking worries about oversupply.

Concerns around future oil demand amid weakening global economic growth and doubts on the impact of planned OPEC-led production cuts were also hurting prices, traders said.

US West Texas Intermediate (WTI) crude futures were at $49.35 per barrel at 0035 GMT, down 1.06 percent, or 53 cents, from their last settlement.

US crude prices have tumbled more than 35 percent since early October and are currently at levels not seen since October 2017.

International Brent crude oil futures had yet to trade.

"Crude oil prices were lower amid fears of weaker demand pushing inventories higher in the United States," ANZ Bank said on Tuesday.

Oil production from seven major US shale basins is expected to surpass 8 million barrels per day (bpd) by the end of the year, the US Energy Information Administration said in a monthly report on Monday.

Inventories at the US storage hub of Cushing, Oklahoma, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape on Monday.

"Investors also remained concerned that OPEC will struggle to keep to its agreement to reduce output. This is likely to see prices remain under pressure until there is evidence that output is being cut," ANZ Bank said in a note.

Supply curbs agreed by the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies might not bring about the desired results as US output goes on increasing and as Iran keeps pumping out more oil, analysts said.

Fuelling those doubts, Russian oil output has been at a record-high of 11.42 million barrels per day (bpd) so far in December.

"There remains high suspicion as to what extent Russia will fill their commitment," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

"But enveloping supply concerns is the increasing likelihood of a protracted economic downturn in China that continues to stoke fears of demand slowdown," Innes added.

China's November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as the economy lost further momentum.

Meanwhile, the US Federal Reserve is widely expected to raise interest rates again at the end of its two-day meeting on Wednesday, impacting the dollar, which in turn may usher a major move in oil prices, analysts said.

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India's worst fear: Can crude oil prices hit multi-year highs again?

Oil prices have crashed more than 30 percent since hitting a four-year high of almost $87 a barrel in early October. Worries over glut gripped the market and concerns over global economic growth made sentiment turn negative.

The threat of supply shortage from Iran on account of renewed US sanctions after Trump's rescinded the nuclear deal lifted the Asian benchmark  Brent oil to multi-year highs.

However, the recent decision from Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC allies lead by Russia has creased widespread anomalies in pricing.

Despite pressure from the US to continue the present supply status quo, Saudi Arabia, the de facto leader of OPEC and other top oil producers have decided to cut the global oil output.

The OPEC members will curb 0.8 million bpd output versus its October levels while the non-OPEC allies will reduce 0.4 million bpd.

Anyhow, a combined cut of 1.2 million barrels per day against an earlier expectation of 1 million bpd will be reflected in the global markets by January.

Though top producers like Iran, Libya, Venezuela, and Qatar are exempted from the supply cut deal, the decision is perhaps to support global prices.

Saudi Arabia, the leading producer in the OPEC, is expected to cut output more than other peers in the grouping. Reportedly, the country would reduce its output to 10.2 million bpd in January, going far beyond a 2.5 percent reduction from its October levels.

The Russia-led non-OPEC allies have also agreed to slash output. Russia is the world’s second largest oil producer, contributing about 10 percent of global production.

Meanwhile, the threat of supply glut is still in the market. Iran, the third top producer of OPEC is now set to push exports by offering larger discounts to its buyers. The U.S imposed sanctions on Iran from November but unexpectedly allowed a broad exemption to major Asian oil consumers which permits them to continue import from Iran.

Earlier, oil exports from Iran fell drastically, about 60-80 percent due to limited imports from key Asian buyers like China, India, Japan, and South Korea.

Presently, export from the country is set to rebound using the waiver from US sanctions. China, the chief importer of Iranian oil started imports in December and Japanese and South Korean buyers are preparing to resume purchase from January. Indian refineries are also planning to buy larger quantities by January after a gap of six months.

Simultaneously, concerns over demand from top Asian markets may weigh prices later. Asia’s largest economy, China has recently reported a slow growth rate.

A decline in manufacturing numbers and a drop in car sales indicates that the trade conflict with the US is starting to add to the strain on the world's largest economy.

The Japanese economy fared poorly in the third quarter due to natural disasters and a decline in exports. A feeble Indian currency would result in higher cost for imports, which may hit demand for oil. Car sales in the country are also expected to register a decline this year.

Looking ahead, a sudden recovery in prices is still on the cards but, the continuing deceleration of economic activity may curtail energy demand later.

Shrinking demand growth and elevating U.S shale production pointed towards an emerging surplus which may also have an adverse impact on market sentiment.

On the prices front, the global benchmark US WTI is likely to turn higher as long as the strong support of $48 a barrel is undisturbed. An unexpected drop below the same would open room for long liquidation pressure.

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Oil prices fall as investors take profits amid China economy worries

Oil prices fell on Friday as investors cashed in gains of more than 2 percent made during the previous session on concerns demand may slump amid slowing economic growth, though there are still expectations for producer supply cuts to support prices.

China, the world's second-largest economy and the largest crude importer, on Friday reported some of the slowest retail sales and industrial output growth in years for November, highlighting the risks of the country's trade dispute with the United States.

Oil refinery throughput in November in China fell from October, which was the second-highest month on record, suggesting an easing in Chinese oil demand, though runs were 2.9 percent higher than a year earlier.

However, some support for prices remains because of the output cuts agreed between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers including Russia. That could create a supply deficit by the second quarter of next year, the International Energy Agency (IEA) said on Thursday.

Brent crude oil futures were at $61.09 per barrel at 0353 GMT, down 36 cents, or 0.6 percent, from their last close.

US West Texas Intermediate (WTI) crude futures were at $52.47 per barrel, down 11 cents, or 0.2 percent, from their last settlement.

"I think after the big moves overnight there's a little bit of self-shock among traders, volumes are well down... I don't see a great deal of follow through on last night's moves," said Michael McCarthy, chief markets strategist at CMC markets.

International benchmark Brent crude rose 2.2 percent on Thursday, while WTI climbed 2.8 percent.

"After the big move yesterday, it's a little bit of consolidation that's happening," said Jonathan Barratt, chief investment officer at Probis Securities in Sydney.

For the week, however, Brent is set to drop 0.9 percent and WTI is set to fall 0.3 percent.

As a part of the OPEC supply-cutting deal agreed last week, its de facto leader Saudi Arabia plans to reduce its output to 10.2 million barrels per day (bpd) in January.

In China, refineries processed 50.46 million tonnes of crude oil last month, or 12.28 million bpd, up 2.9 percent from the same month last year, the National Bureau of Statistics reported.

However, that is down from October and from the record of 12.49 million bpd reported in September.

Still for the first 11 months of the year, refinery output gained 7.2 percent to 554.48 million tonnes, or 12.12 million bpd, on track for an annual record.

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Source: Moneycontrol

Oil prices climb amid signs of easing US-China trade tensions

Oil prices rose on Thursday, buoyed by a drawdown in U.S. crude inventories and signs that China is taking more concrete steps to put a trade war truce with Washington into action.

Crude oil prices have also been supported by OPEC-led supply curbs announced last week, although gains were capped after the producer group lowered its 2019 demand forecast.

International Brent crude oil futures were at $60.46 per barrel at 0213 GMT, up 31 cents, or 0.52 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $51.40 per barrel, up 25 cents or, 0.49 percent.

"Crude oil prices rose, helped by the easing trade tension, as well as a fall in inventories," ANZ bank said on Thursday.

"The news that China is looking to redraft its 'Made in China' 2025 plan boosted hopes that trade talks are progressing better than expected."

China made its first major U.S. soybean purchases in more than six months on Wednesday, while Beijing also appears to be easing its high-tech industrial push, dubbed "Made in China 2025," which has long irked Washington.

A drop in U.S. crude stockpiles, though less than expected, has helped boost sentiment, analysts said.

U.S. crude inventories fell by 1.2 million barrels in the week to Dec. 7, compared with market expectations for a decrease of 3 million barrels.

Meanwhile, the Organisation of the Petroleum Exporting Countries (OPEC) said 2019 demand for its crude would fall to 31.44 million barrels per day, 100,000 bpd less than predicted last month and 1.53 million less than it currently produces.

This adds to the concerns of several market watchers that the decision led by the group to cut production by 1.2 million bpd overall might not be enough to override a glut, especially on the back of soaring U.S. output.

"The U.S. is pumping oil like its going out of fashion and that's providing issues for the traditional supply-demand/OPEC dynamic," said Hue Frame, portfolio manager at Frame Funds in Sydney.

The United States, where crude production has hit a record 11.7 million bpd, is set to end 2018 as the world's top oil producer, ahead of Russia and Saudi Arabia.

"At this point, the OPEC+ cuts appear to have merely put a floor under prices," Societe Generale analyst Michael Wittner said in a note.

"We still believe that there is significant upside from current levels; however, it is not clear when the movement will take place. If the market needs to see stockdraws first, it could be a couple of months."

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Source: Moneycontrol

Oil prices on shaky ground amid global financial market worries

Oil prices remained on shaky ground on Tuesday after sliding by 3 percent the previous day, pressured by weakness in global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.

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

International Brent crude oil futures had yet to trade.

Crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia.

Crude prices are down around a third since early October amid the financial market slump and an emerging oil supply overhang.

"There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

"The general risk-off tone in global markets and the stronger dollar ... are contributing to the selling pressure."

The OPEC-led group of oil producers last Friday announced a supply cut of 1.2 million barrels per day (bpd) in crude oil supply from January, measured against October 2018 output levels.

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Source: Moneycontrol

Oil extends gains after OPEC-led group seals deal to cut supply

Oil prices rose on Monday, extending gains from Friday when producer club OPEC and some non-affiliated producers agreed a supply cut of 1.2 million barrels per day (bpd) from January.

Despite this, the outlook for next year remains muted on the back of an economic slowdown.

International Brent crude oil futures were at $62.21 per barrel at 0218 GMT, up 54 cents, or 0.9 percent, from their last close.

Prices surged on Friday after the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including heavyweight Russia announced they would cut oil supply by 1.2 million bpd, with an 800,000 bpd reduction planned by OPEC-members and 400,000 bpd by countries not affiliated with the group.

US West Texas Intermediate (WTI) crude futures were at $52.63 per barrel, up 2 cents, held back as the booming US oil industry is not taking part in the announced cuts.

The OPEC-led supply curbs will be made from January, measured against October 2018 output levels.

"Our key conclusion is that oil prices will be well supported around the $70 per barrel level for 2019," analysts at Bernstein Energy said on Monday.

Despite the cuts, that was still a price forecast reduction of $6 per barrel as Bernstein reduced its crude oil demand forecast from 1.5 million bpd previously to 1.3 million bpd for 2019.

US bank Morgan Stanley said the cut was "likely sufficient to balance the market in 1H19 and prevent inventories from building".

It added that it expected "Brent to reach $67.5 per barrel by 2Q19, down from $77.5 before."

Oil prices have been pulled down sharply since October by signs of an economic slowdown, with Brent losing almost 30 percent in value.

Japan, the world's third biggest economy and No.4 oil consumer, on Monday revised its third quarter GDP growth down to an annualised rate of -2.5 percent, down from the initial estimate of -1.2 percent.

Meanwhile, the two world's biggest economies, the United States and China, are locked in a trade war which is threatening to slow global growth and battering investor sentiment.

Despite the expectations of a slowdown, physical demand on the ground remains healthy.

China, the world's biggest oil importer, over the weekend reported an annualised 8.5 percent jump in November crude imports, to 10.43 million bpd, marking the first time China imported more than 10 million bpd. That leaves the world's second-biggest economy on track to set yet another annual import record.

Strong demand is being driven by Chinese purchases for strategic reserves, but also by new refineries, triggering excess supply of fuels, filling up storage tanks and eroding refinery profits across Asia.

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Source: Moneycontrol

Oil dives nearly 3% after OPEC delays output decision

Oil fell nearly 3 percent in choppy trading on December 6 after OPEC and its allies ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter the next day.

The Organisation of the Petroleum Exporting Countries (OPEC) met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan.

OPEC tentatively agreed to cut oil output but was waiting for a commitment from non-OPEC heavyweight Russia before deciding volumes.

Russian Energy Minister Alexander Novak flew home from Vienna earlier for talks with President Vladimir Putin in Saint Petersburg. Novak returns to Austria's capital on Friday for discussions among Saudi-led OPEC and its allies.

Saudi Energy Minister Khalid al-Falih said OPEC needed Russia to cooperate, and said a decision was likely by Friday evening.

"If everybody is not willing to join and contribute equally, we will wait until they are," al-Falih said.

Market watchers had expected a joint cut of 1 million to 1.4 million barrels per day (bpd). The OPEC, non-OPEC meeting is set to start on Friday at 1100 GMT.

"All eyes are now fixated on tomorrow's OPEC+ joint declaration, and a combined output cut of at least 1 million barrels per day will be required to see a meaningful recovery in oil prices," said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

Brent crude futures fell $1.50, or 2.4 percent, to $60.06 a barrel, after dropping to a session low of $58.36. U.S. crude futures fell $1.40, or 2.7 percent, to $51.49, bouncing off a low of $50.08.

The benchmarks have slumped more than 25 percent so far this quarter.

Prices found some support after data showed U.S. crude stockpiles declined last week, the first drawdown since September. Inventories had climbed for 10 straight weeks as domestic production grew to a weekly record at 11.7 million bpd, data from the U.S. Energy Information Administration (EIA) showed.

The United States, however, last week became a net exporter of crude and refined products for the first time since at least 1973, exporting a net 211,000 bpd, on the back of a jump in crude exports to a record of 3.2 million bpd, the data showed.

Crude prices have sagged almost a third since October, in part due to concerns about oversupply coming to the fore again as U.S. production rose in tandem with increased output from Saudi Arabia and Russia. The three countries are the world's largest producers of oil.

OPEC's crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million bpd.

European equities hit their lowest in two years. Commodity-sensitive currencies such as the Russian rouble tumbled on sliding oil prices and the arrest of a top executive of Chinese tech giant Huawei in Canada for extradition to the United States, just ahead of crucial trade negotiations between Washington and Beijing.

Barclays said in its Global Outlook that "investors need to lower their expectations" and "2019 should be a period of lower returns and higher volatility." It forecast that the global economy would "slow over the next several quarters" although it added that "not one major economy is near recession."

Ann-Louise Hittle, vice president, macro oils at Wood Mackenzie, said world oil demand growth is expected to average close to 1.1 million bpd in 2018 and 2019.

"This sits against a backdrop of rapid non-OPEC production growth ... the strength in non-OPEC production creates pressure on OPEC to curtail its output for 2019 from recent levels, if oil prices are to remain stable," Hittle said.

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Source: Moneycontrol