The G20, November 30-December 1, might just hasten the decision to cut oil production or decide by how much, as the world’s top leaders assemble in a summit in Buenos Aires.
If not, then the December 6, OPEC policy meeting in Austria will surely put an end to speculations around production cuts that could send Brent spiraling down to $50 levels.
Either way, oil pundits are jittery, not knowing what to expect.
Record Saudi oil production pulled down crude prices on, according to CNBC.
International Brent crude oil futures briefly dipped below $60 per barrel before edging back to $60.10 per barrel, still down 38 cents, or 0.6% from their last close, Monday.
U.S. West Texas Intermediate (WTI) crude futures were at $51.21 per barrel, down 42 cents, or 0.8%.
Saudi pumped 11.3 million bpd in November, a record, but still shy of the 11.7 million daily output from U.S. drillers.
In January, Saudi production was below 10 million barrels.
“Since their most recent peaks in early October, oil prices have lost almost a third of their value, weighed down by an emerging supply overhang and by widespread weakness in financial markets,” said CNBC.
Said Jack Allardyce, oil analyst at financial services firm Cantor Fitzgerald Europe: “a lot depends” on the outcome of the Group of 20 (G20) meeting in Buenos Aires where the United States and China are expected to address their trade disputes, and on a meeting of the Organization of the Petroleum Exporting Countries (OPEC).”
Fereidun Fesharaki, chairman of energy consultancy FGE, wrote in a note to clients:”If OPEC plus Russia cannot send a very strong message to the market, prices are poised to fall further, perhaps to Brent $50 per barrel and WTI of $40 per barrel or less.”
Glut and Cuts
The International Energy Agency forecasts global oil output to rise by 2.3 million barrels a day next year against a 1.3 million increase in overall demand, a move that would accelerate a glut in worldwide supply.
Reports suggest Saudi will push OPEC into cutting output by as much as 1.4 million barrels per day in order to fix an imbalance resulting from Iran escaping the bulk of US sanctions on it when major countries were issued import waivers earlier this month.
Saudi Arabia has already said it supports a drop in output and has pledged to reduce oil exports by 500,000 barrels a day in December, compared with November, according to Bloomberg.
“A slowing global economy is also likely to pressure prices in the weeks ahead, with private data from Europe last week showing activity in the single currency area easing to the weakest pace in four years this month while China, the world’s biggest energy consumer, saw GDP grow at the slowest pace since 2009 last quarter,” said the Street, an industry site.
Bloomberg says that Khalid Al-Falih and Alexander Novak, the Saudi and Russian energy ministers, are scheduled to travel to Buenos Aires, according to people familiar with their plans.
“Their presence reinforces the impression that Saudi Arabia and Russia will try to reach a deal before the OPEC meeting a few days later,” it added.