Possible Ease in Oil Output Cuts Drives Prices Higher

December 24, 2019
opec oil output
Image Credit: Reuters

By Adedapo Adesanya

Oil recovered from earlier losses in the day on Monday night as Russia said members of the Organisation of the Petroleum Exporting Countries (OPEC) may consider easing output cuts next year.

This information pushed prices high at the global market and was supported by another news that the first part of the US-China trade deal may possibly be signed next month.

Consequently, the price of Brent crude, the international benchmark, which had fallen during the day, bounced back at night by 35 cents or 0.48 percent to trade at $65.51 per barrel.

In the same vein, the US West Texas Intermediate (WTI) crude, which had also declined in the day, moved up by 0.3 percent equivalent to 18 cents to quote at $60.62 per barrel.

OPEC and other top producing nations led by Russia had agreed earlier this month in Vienna, Austria to extend and deepen output cuts in the first quarter of 2020 by 1.7 million barrels.

However, on Monday, Russia’s Energy Minister, Mr Alexander Novak, was quoted as saying that the group, known as OPEC+, may consider easing the output restrictions at their next meeting scheduled to hold March 5 – 6, 2020.

“We can consider any options, including gradual easing of quotas, including continuation of the deal,” Mr Novak was quoted as telling Russia’s RBC TV in an interview.

This is coming on the heels of non-OPEC global supply that is expected to rise next year due to higher output from countries including the United States, Brazil, Norway and Guyana, which became an oil producer last week.

Oil prices may struggle as the Christmas break approaches after it had last Friday failed to keep up gains for seven straight session following pressure from panic sales ahead of the festive period.

With the Christmas holiday approaching, price expectations may remain in the $65 mark for the Brent and the WTI around $60 per barrel as this will only be held in place by the confidence level brought about by positivity of the trade agreement reached by the United States and China.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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