Oil Up as OPEC Output Slips | Rigzone
Heesu Lee and Alex Longley
Tuesday, December 03, 2019
Oil extended gains as OPEC’s crude output dropped before the group and its allies meet this week.
(Bloomberg) — Oil extended gains as OPEC’s crude output dropped before the group and its allies meet this week to set the path for future production cuts.
Futures added 0.7% in New York even as Asian stocks declined following the announcement of fresh tariffs by President Donald Trump. Output from the Organization of Petroleum Exporting Countries slipped by 110,000 barrels a day last month, according to data compiled by Bloomberg, while an analyst survey predicted a weekly drop in U.S. crude stockpiles.
Crude has climbed since early October on signs the U.S. and China are close to a breakthrough on an initial trade deal. Iraq said on Sunday that OPEC+ may consider deepening output cuts, contrary to expectations, while Saudi Arabia has signaled it will no longer tolerate cheating by other members on quotas.
“The global oil supply-demand balance requires an extension of the current OPEC+ cuts,” Damien Courvalin, an analyst at Goldman Sachs Group Inc., wrote in a report. “Already large speculative buying in recent weeks and some expectations for a longer/larger cut suggests that an uneventful three-month extension is unlikely to provide much upside to current prices.”
West Texas Intermediate for January delivery advanced 40 cents to $56.36 a barrel on the New York Mercantile Exchange as of 9:05 a.m. London time. Brent for February settlement gained 33 cents to $61.25 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5 premium to WTI for the same month.
The drop in OPEC’s production last month was led by Angola, whose output fell to the lowest in more than a decade. Iranian volumes, already squeezed to the lowest since the 1980s by U.S. sanctions, dwindled even further.
U.S. crude inventories probably shrank by 1.5 million barrels last week, according to the Bloomberg survey of analysts. If that’s confirmed by Energy Information Administration data on Wednesday, it would be the first decrease in six weeks.
–With assistance from James Thornhill.
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