OPEC November oil output rises

This all comes back to an interesting paper by BP, in which it notes that OPEC’s ability to stabilize the oil market by reducing or raising production is diminishing as its share in total global output declines.

Oil prices fell slightly Tuesday as Saudi Arabia’s oil minister would not be drawn on the outcome of OPEC’s upcoming meeting on crude production levels.

“A change of policy now would quickly be commented on as an eventual admission that it had been wrong in the first place-a situation that not only Saudi Arabia would want to avoid”, said analysts from consultancy JBC Energy. The European benchmark crude was at a premium of $2.70 to WTI.

Venezuelan President Nicolas Maduro on Wednesday said his country, OPEC’s traditional price hawk, would push for a 5 percent output cut to shore up prices when OPEC meets on Friday.

At its last regular meeting in June, OPEC defied calls to cut output despite the low oil price, extending what is now a year-long strategy of attempting to preserve market share and fend off competition from oil extracted from North American shale rock. Inventories at the Cushing, Oklahoma, delivery hub for USA crude futures accounted for a third of the build, rising 428,000 barrels, the EIA reported.

After three consecutive years of adding 1 million barrels/day, U.S production shows a flat scale this year.

Post the fall in Dubai oil price to a 7-year low in November, the traders and refineries expect to see higher price discounts for Saudi Arab Light Crude in January, as per Reuters Survey. Oil prices spiked on the report but quickly pared gains.

During the meeting, Iran is predicted to announce its plan to increase oil export in relation to the elimination of sanctions imposed by western countries as result of the agreement on Tehran’s nuclear program.

Although the subsequent collapse in crude oil prices led to diminished rig counts and thousands of lost energy sector jobs in the USA, the domestic fracking industry proved to be far more resilient than most anticipated.

A strengthening dollar makes commodities priced in the U.S. currency more expensive for users of other currencies, reducing their appeal.

Iran has also asked OPEC members to respect the production ceiling of 30 million barrels per day.