Oil prices climb on prospect of OPEC cuts

A couple of months are too long a period in the crude world. Things change rapidly. — File

OPEC ministers are scheduled to meet in Vienna on December 6, with their allies from outside the group joining them the next day.

This comes in part after Washington granted Iran's major oil customers, mostly in Asia, unexpectedly broad exemptions to sanctions it re-imposed on Tehran in November.

Hussein Sayed, chief market strategist at futures brokerage FXTM said USA comments from APEC "suggest that a deal between President Trump and President Xi is unlikely to see the light when the leaders meet at the G20 Summit later this month".

Russia-which together with Saudi Arabia and some Arab Gulf producers has been raising production since June to offset Iranian losses-saw its oil production set a new post-Soviet record high of 11.41 million bpd in October, up from 11.36 million bpd in September.

In response to those concerns, Saudi Arabia has said producers may need to cut 1 million barrels a day, while Russian President Vladimir Putin said Thursday an oil price of "around $70 suits us completely".

Portfolio managers have sold the equivalent of 553 million barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013. Trade tensions between the USA and China escalated over the weekend, adding to worries supply may overtake consumption.

Oil futures fell about 1 percent on Monday amid global oversupply worries, but losses were muted as investors eyed potential sanctions on Iran from the European Union, a possible production cut from OPEC and slightly bullish storage drawdown in USA crude stocks.

Brent crude oil futures were at $67.41 a barrel this morning, up 65 cents, or 1%, from their last close.

Presumably, prices at that level would be too low even for USA president Donald Trump, who has spent the better part of the year pressuring OPEC to produce more and lower prices from earlier highs of $80; this week the brash billionaire met with Russian president Vladimir Putin and discussed the issue, with the latter subsequently telling media that "where [the market] is now, where it was recently, anything around $70 suits us completely".

"Oil prices rose (last week) on the hope that OPEC and partners will act to reverse bearish sentiment, but from a technical set-up, bear mode remains intact", OANDA strategist Stephen Innes said.

Funds now hold a net long position of just 547 million barrels, less than half the recent peak of 1.1 billion at the end of September, and down from a record 1.484 billion in January.

On the trade war front, U.S. President Donald Trump said on Friday that China wants to make a deal on trade with the United States, but any pact has to be reciprocal.

Brent crude futures were down 44 cents at $66.32 a barrel by 12:24 p.m. ET. The Cboe/Nymex Oil Volatility Index fell more than 3 percent on Friday, declining for a third day.

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