Oil prices rise after Saudi Arabia announces a reduction in supply in December

SINGAPORE (Reuters) – Oil prices jumped more than 1.5 percent on Monday after Saudi Arabia, the main exporter, announced a cut in supply in December and other producers were considering a discount for 2019.

Brent crude futures in the first month, LCOc1, a benchmark for world oil prices, were $ 71.59 per barrel at 07:49 GMT, up 2% from their last close.

The WTI futures price (West Texas Intermediate) rose 1.6% to $ 61.15 per barrel.

Saudi Arabia plans to cut its world oil supply by 500,000 barrels a day in December, its energy minister said Sunday, as the country has uncertain prospects to get other producers to accept a deal. coordinated reduction of its production.

Khalid al-Falih told reporters that Saudi Aramco's customer appointments would be reduced by 500,000 b / d in December compared with November due to the drop in seasonal demand. The reduction represents a reduction in global oil supply of about 0.5%.

Saudi Arabia is de facto the leader of the Organization of the Petroleum Exporting Countries (OPEC).

A Kuwaiti official, also a member of OPEC, said on Monday that major oil exporters over the weekend had "discussed a proposal to reduce the supply (gross) of oil." "Next year", but without providing details.

OPEC's second largest producer, Iraq, also said it could join the initiative.

Peter Kiernan, senior energy analyst at the Economist Intelligence Unit in Singapore, said that OPEC was "focused on mitigating downside risks" after the fall in prices of the gross about 20% over a month as a result of an upsurge in supply, especially from the three largest producers, the United States. , In Russia and Saudi Arabia.

For consumers, the 20% drop in oil prices since early October has been a relief.

"This drop in prices is great news for Asian economies facing external difficulties, such as Indonesia, the Philippines and India.It is also useful in case of worrying inflation", said Robert Carnell, chief economist and director of research at ING Asia. Reuters Global Markets Forum Monday.

Major emerging economies such as India, Indonesia and Turkey have come under heavy pressure earlier this year as their currencies depreciated against the dollar, while oil prices have increased, leading to an erosion of demand.

Beyond demand concerns, Saudi Arabia and other traditional OPEC producers dominated by the Middle East are particularly concerned about the rise in US production.

US energy companies added 12 oil rigs last week to November 9, looking for new reserves, bringing the total to 886, the highest level since March 2015, energy services firm Baker announced on Friday. Hughes.

The number of rigs indicates that the production of US crude C-OUT-T-EIA, already at a record 11.6 million barrels per day, will increase further.

"One thing is quite clear, OPEC is about to shake the shale as crude oil production in the United States reaches a record 11.6 million barrels a day and will cross the threshold of 12 million next year, "said Stephen Innes, trade manager for the Asia-Pacific region. Oanda futures brokerage in Singapore.