Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
Oil market overview
2019-11-11 • Updated
At the weekend, a joint committee of energy ministers from OPEC and non-OPEC oil producing countries pledged to consider extending output deal cut for additional 6 months.
Venezuela’s Oil Minister Nelson Martinez supported the idea of deal extension. Iraq, Algeria, and Angola also said that they would back a prolongation of the deal. Mohammed Al Rumhy, energy minister of non-OPEC producer Oman, said that a further extension of the supply reducing deal looks expedient. Kuwait was the first nation calling for the extension of output cut agreement.
The biggest OPEC supplier Saudi Arabia has indicated that it won’t be against the prolongation of the agreement if global crude oil stockpiles remain above their five-year average.
There are several factors that undermined the effectiveness of the November supply reduction deals: low seasonal demand, refinery maintenance, rising non-OPEC supply (the recent estimate of compliance rate of the non-OPEC members reached 64%). A further extension of the deal could be a rational decision once the impact of aforementioned factors is eliminated.
Russia Energy Minister Alexander Novak said that the country is not ready to support a possible extension of oil supply cuts in the second half of the year, even if the majority of oil suppliers acknowledge their contribution to the reduction of global oil stockpiles. He also said that Russia won’t make any pledges until April as it needs more time to assess the oil market, inventories and US drilling activity and non-OPEC countries’ production. This was a massive drag for oil prices.
An additional factor that led to the quotes’ downfall was Baker Hughes rig count data released last Friday. It revealed that the number of active US rigs drilling for oil increased by 21. It was the tenth weekly increase in a row.
Brent oil futures slumped to $50.60 in the opening hours of Monday’s session.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.