OPEC meeting looking at new price peril

OPEC meeting looking at new price peril

So far, the oil-producing Middle-East group has organized a new plan of supply cuts that would generate some hope to uphold crude futures.

Last week's Friday, it was reported that the oil prices have decreased to their minimum in a period of more than a year.

At the OPEC meeting next week, “oil producers could well decide to cut output by over 1 [million] barrels a day, with Russian Federation also starting to express concern about falling prices, ” said Michael Hewson, chief market strategist at CMC Markets UK, in a Friday note.

Russia's Vladimir Putin and Saudi Arabia's Mohammed bin Salman may discuss oil supplies at the summit in Argentina. The price of West Texas Intermediate (WTI) for January delivery increased 1.01 percent, while Brent crude for January delivery lost 0.15 percent, during the week ending November 30.

The Alberta government's decision was forced on it because the crude oil produced in the province has no way to get out. "There is no final deal on volumes but we together with Saudi Arabia will do it". "But the details are now what matter - how much will be cut, from when, for how long and, crucially, from what baselines". Last week, Alberta's government promised to buy about 80 locomotives and 7,000 rail cars to help move the crude out of the oil sands region and to market, but that won't drain the surplus supply very quickly and won't do much to get WCS prices back up.

Meanwhile, Qatar's energy minister said the country, which accounted for less than 2 percent of OPEC's production in October, would leave from January and thereafter would not be committed to any agreements by the group.

The unity Putin and the Saudi crown prince showed at the G-20 meeting amid all the controversies shifted the momentum in favor of a new agreement, said Ildar Davletshin, an oil and gas analyst at Wood & Co.

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But since reaching four-year highs in October, oil prices have plunged around 30 percent as worries about falling demand in a slowing world economy have taken their toll.

Brent crude for February settlement dropped US$0.45 to US$59.46 on London's ICE Futures Europe exchange.

According to the government, production capacity in Alberta now exceeds transportation capacity by 190,000 barrels a day, and there are 35 million barrels of crude in storage, double the normal level.

"Markets think there will be some sort of a cut", said Mike Wittner, head of oil market research at Societe Generale SA. However, WTI prices lost 20.9% in November.

That growing belief saw oil prices trim early falls on Friday.

Alberta's producers have been particularly battered by crude's slump amid surging oil-sands output, a shortage of pipeline space and heavy USA refinery maintenance.

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