Oil Prices Rise As OPEC Plans Supply Cut

Darnell Taylor
June 13, 2019

U.S. withdrawal of tariff threat against Mexico removed cloud over global economy. There is a debate obviously within the country about the exact volume that Russian Federation should be producing in the second half."The coalition has yet to decide when it will meet to address the supply accord". The market is still looking to hear a clear cut answer on a production cut.

Brent crude futures, the global benchmark for oil prices, were down 87 cents, or 1.4 percent, at $61.42 a barrel by 0231 GMT. U.S. West Texas Intermediate (WTI) crude lost 73 cents, or 1.4%, to end at $53.26 a barrel.

President Vladimir Putin said last week that Russian Federation and the Organization of the Petroleum Exporting Countries (OPEC) disagreed over what constituted a fair price for oil, but that they would take a joint decision at the policy meeting.

OPEC and its partners will take the current "economic bearishness" into account when they meet in coming weeks, and are committed to keeping oil markets balanced this year and beyond, its Secretary-General, Mohammad Barkindo has said.

On Monday's (June 10th) market, crude rally was nearly entirely goaded by a signal of OPEC-kingpin Saudi Arabia, that the club of oil producers including Russian Federation would restrict supply to current level beyond June in order to balance a stormy crude oil market amid an intransigent United States inventory rise.

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US sanctions on Iran and Venezuela are likely to tighten the market, many analysts forecast, while US-China trade tensions could dampen global oil demand.

"Over the past week or so, our economists have revised down their GDP growth outlook for the US, China, India and Brazil", Barclays bank said on Monday in a note about the economy and its impact on oil demand.

The EIA lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd and wound back its forecast for 2019 United States crude production to 12.32 million bpd, 140,000 bpd less than the May forecast.

OPEC countries and non-member producers including Russian Federation, have limited their oil output by 1.2 million barrels per day this year to prop up prices.

Slowing demand has also contributed to a slump into negative territory in refining profits for Asian naphtha, an important feedstock for the petroleum industry, to levels not seen in over a decade.

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