Oil rises after Saudi Arabia warns that a weaker demand could justify a reduction in production of a million bpd

LONDON (Reuters) – Oil prices rose more than 1 percent on Monday, its biggest rise in a month after Saudi Arabia announced that OPEC and its partners, convinced that the demand would be sufficient to justify a reduction in production of one million barrels a day.

Saudi Arabia, the world's largest oil exporter, announced on Sunday that shipments would be cut by half a million barrels a day in December due to declining seasonal demand.

LCoC1 rose 92 cents per barrel at 0924 GMT to $ 71.10 per barrel, while US crude futures rose 50 cents to 60.69 dollars per barrel.

Saudi Energy Minister Khalid al-Falih said Monday that OPEC and its partners agreed that the technical analysis shows the need to reduce energy consumption. oil supply of nearly one million bpj compared to October levels to avoid unwanted accumulation of crude oil.

"The balances for 2019 show, especially in the first half, that there will be a significant global oversupply," said Olivier Jakob, an analyst at Petromatrix.

The Organization of Petroleum Exporting Countries and the International Energy Agency are releasing their respective monthly reports on the outlook for oil supply and demand later in the week.

"The OPEC and the IEA are releasing their updates on the oil market this week and the outlook for 2019 was already weak. I think these reports will be even weaker because they will have to adjust to the increase in US production, "Jakob said.

The price of oil fell by around 20% last month, due to a rapid increase in global supply and the risk of slowing demand, especially from customers such as India, Indonesia and China, whose currencies have weakened. the dollar and eroded their purchasing power.

Production in Saudi Arabia, the United States and Russia alone has increased by 1.05 million barrels a day over the last three months, based on official production figures.

This left OPEC struggling to adjust its own production, which, with about 33.3 million bpd, accounts for about one-third of the world's total daily supply.

A senior Kuwaiti group member, Kuwait, said 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.

The increase in US production is one of the main problems of OPEC.

"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.