Oil prices rise on likelihood of ongoing OPEC+ supply cuts

Darnell Taylor
June 11, 2019

USA withdrawal of tariff threat against Mexico removed cloud over global economy.

The sixth meeting of the Saudi-Russian Joint Committee on Trade, Economic and Scientific Cooperation was held in Moscow on Monday under co-chairmanship of Saudi Minister of Energy, Industry and Mineral Resources Khalid al-Falih and Russian Energy Minister Alexander Novak, reported the Saudi Press Agency.

Russian Federation doesn't need oil prices to be too high and sees the $60-65 a barrel price-the price at which Brent Crude now trades-as "quite satisfactory", Putin said last week.

WTI crude oil -0.3% to $53.82/bbl, Brent -0.9% to $62.74/bbl.

US crude output C-OUT-T-EIA has risen by 1.6 million barrels per day (bpd) over the past year, to a record of 12.4 million bpd, making the United States the world's biggest oil producer ahead of Russian Federation and Saudi Arabia.

Oil prices stabilized on Tuesday on expectations that producer group OPEC and its allies will keep withholding supply to prevent prices from tumbling amid a broad economic slowdown which has started eating away at fuel demand growth.

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Oil prices climbed 35% in the first four months of the year as OPEC reined in output while countries from Iran to Venezuela suffered involuntary cutbacks in supply.

"With China slowing, the European Union sickly and the USA data starting to wobble, an economic downturn remains a clear and present danger", said Stephen Innes, managing partner at Vanguard Markets.

"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.

Analysts also warn of risks to the global economy from the United States' trade war with China.

"These countries account for more than three-fourths of our oil demand growth assumptions for this year and the revisions imply a 300,000 barrels per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year", the British bank said.

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