Oil Falls From 16-Month High as OPEC Seeks Wider Cut Cooperation

With non-Opec countries also agreeing to a production cut of 0.6 million barrels per day, oil prices regained the psychological $50 a barrel level, while “speculation is rife that it might go up even further”, Pradhan had said on Monday at the inauguration of the Petrotech 2016 hydrocarbons conference here.

It shows OPEC oil production climbing to a record level of just under 34.2 million barrels a day in November.

Oil prices have risen 18 percent since OPEC’s surprise agreement last week to make its first supply cuts in eight year, which was also the first accord since the late 1990s involving non-members.

Oil fell from a 16-month high Tuesday after OPEC and Russian production hit new highs last month ahead of their production cut deal but the U.S. Energy Information Administration upgraded its outlook on crude prices.

A Crisil report said the price of petrol may rise 5-8 per cent and that of diesel by 6-8 per cent over the next 3-4 months following the production cut and the resultant spike in crude prices.

“And I think that’s a good thing because.it makes it more hard for OPEC to actually reach an agreement and. for that agreement to actually enter into force, because they can’t control the oil market like they used to be able to”.

Mohammad Barkindo, secretary-general for OPEC, said major producers to the December 10 meeting in the Austrian capital may include powerhouses Mexico and Kazakhstan, along with minor players such as Bolivia and Uzbekistan; other countries include, in descending order of production importance, Colombia; Oman; Azerbaijan; Egypt; and Congo.

Issues are also being raised over Russian production.

Another worry to traders was the fact that Russia’s output increased to 11.21 million bpd last month-the highest level since the Soviet era. At last week’s meeting, Indonesia suspended its membership again.

In November, Angola provided the largest supply boost as planned maintenance on the Dalia crude stream ended.

Most of the 260 respondents to the survey think the organization will succeed in cutting output, but on average by only 600,000 bpd, or half its stated target of 1.2 million bpd. At the same time, oil demand has dropped due in part to a focus on cleaner energy sources.

Market watchers had said OPEC’s decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices.