Brent Oil Recovers Following OPEC Oil Output Cut Announcement

"In recent years, due to the political and economic factors, the price of oil has dropped, and the process has been continuing".

Azerbaijan presented data on its daily oil production in November 2018 to the OPEC Joint Technical Committee as part of the Vienna Agreement, Trend reports citing the Azerbaijani Energy Ministry.

It further expects Brent crude price to average $71.5 a barrel for FY2019 versus its earlier assumption of $80 a barrel, while retaining its assumption of $72.5 a barrel for FY20. Brent crude is down almost 30 percent from its October highs of more than $86.

No oil output cut decision was announced on Thursday after hours of a meeting of the Organisation of the Petroleum Exporting Countries (OPEC).

Saudi Arabia could reduce its daily crude oil shipments overseas by as much as 1 million barrels next month, Reuters reports, quoting unnamed sources close to Riyadh.

OPEC cuts: sufficient or not?

"Crude futures are roughly unchanged from just prior to the OPEC agreement as the market is apparently expressing concerns over an indicated slow start to Russia's output reductions next month", Jim Ritterbusch, president of Ritterbusch and Associates in Chicago, said in a report. Whether it's a trade war between the US and China potentially curbing global demand, or doubts about exactly how OPEC will deliver the cuts, below are some of the reasons crude markets are yet to get excited about the production cuts.

Brent crude futures, the global benchmark for oil prices, traded at around $61-62 a barrel at the time of writing this article.

Saudi Arabia's energy minister held talks Monday with US Energy Secretary Rick Perry, after the Kingdom and its allies defied US pressure to cut oil production in a bid to prop up prices.

Citi, meanwhile, sees oil going nowhere in 2019 and staying at $60 a barrel.

The Americans' remarkable supremacy in the global crude production sector coincides with exports from Saudi Arabia falling in December to about 7.6 million bpd and a projected further decrease of around 7 million bpd in January, according to industry sources.

Prices now hover around $60 a barrel, down from more than $85 a barrel in early October in the face of fears of weaker demand and an increase in supplies.

USA based Capital Economics, meanwhile, sees an average of $63 a barrel over the course of 2019.

West Texas Intermediate for January delivery was at $51.12 a barrel on the New York Mercantile Exchange, up 12 cents, at 1:02 p.m.in Singapore.

Analysts and investors are not yet convinced that the supply cut will be effective in warding off a repeat of 2014, when rapidly rising global production overtook growth in demand and led to a huge overhang of unwanted fuel. Futures settled 2.8 percent lower at $59.97 on Monday.

  • Eleanor Harrison